Archive for December, 2012

Slow economic growth and ample supplies are expected to keep a lid on oil next year with crude prices gradually slipping lower.

But analysts polled by Reuters say a price crash is unlikely and geopolitical concerns should help support the market.

Reuters monthly survey of 26 analysts forecast North Sea Brent crude oil will average $108 per barrel in 2013, down from an average of $111.71 so far this year.

Brent prices are projected to fall further to an average of $105.90 in 2014, the poll showed.

“While geopolitical concerns in the Middle East still remain at the forefront, concerns about the United States going over the ‘fiscal cliff’ and the euro area potentially slipping back into recession could have more dire consequences for crude oil demand for the first half of 2013,” Gain Capital Group analyst Chris Tevere said.

Four analysts forecast Brent would average more than $115 next year, compared with three in last month’s poll. Three analysts saw Brent at below $100 in 2013, compared with five analysts last month.

“With U.S. oil production reaching its highest levels in well over a decade, combined with this potential economic slowdown, it may continue to be a major headwind for oil prices,” said Gain Capital’s Tevere, who forecast 2013 Brent prices averaging $95.


December 20, 2012

One of 2012’s busiest travel periods begins Thursday and is expected to remain hectic through Jan. 2, airport and industry executives said.

At Tulsa International Airport, airlines are forecasting planes will be near capacity Thursday through Monday, airport officials said.

“Our reports from the airlines are that the busiest days will be Thursday and Friday,” said Daniel Meier, coordinator of air service & business development at Tulsa International Airport. “It probably will be fairly busy Saturday and Sunday. We are advising passengers flying out between 5:45 a.m. and 7 a.m. Thursday through Sunday should arrive two hours prior to their flight.”

In recent years, Tulsa passengers have been advised to arrive at the airport 90 minutes before their flight’s departure.

Passengers in Tulsa whose flights depart after 7 a.m. are still advised to arrive at the airport 90 minutes prior to departure, airport officials said.

Complicating travel plans for thousands of Christmas travelers is the forecast of a Midwest blizzard in the states of Kansas, Nebraska, Iowa, Illinois, Wisconsin and Michigan, airline executives said.

American Airlines and Delta Air Lines are offering passengers options to change their travel plans without penalties.

American said on Wednesday that passengers ticketed on American, American Eagle or AmericanConnection flights on Thursday and Friday and whose ticket was issued no later than Wednesday may have their ticket reissued without a change fee for one ticket change provided their flight is to, from or through the following cities: Cedar Rapids, Iowa; Chicago; Des Moines, Iowa; Dubuque, Iowa; Grand Island, Neb.; Grand Rapids, Mich.; Green Bay, Wis.; La Crosse, Wis.; Madison, Wis.; Manhattan, Kan.; Marquette, Mich.; Milwaukee, Wis.; Moline, Ill.; Omaha, Neb.; Rochester, Minn.; Sioux City, Iowa; Traverse City, Mich.; Waterloo, Iowa; Wausau, Wis., and Wichita, Kan.

To change travel dates, contact American reservations at 1-(800)-433-7300.

Delta said passengers should consider departing earlier, postponing or re-routing their travel to avoid possible flight delays and cancellations. Passengers may make one-time changes to their travel schedules without incurring fees, Delta officials said.

Customers booked on Delta-ticketed flights to, from or through airports in Illinois, Iowa, Kansas, Michigan, Nebraska and Wisconsin between Wednesday and Friday may rebook for travel with the same origin and destination, Delta officials said. New flights may occur before or after original travel dates as long as they are ticketed and rescheduled for travel on or before Dec. 28.

Passengers may make changes to their travel plans on Delta’s website or by using the Fly Delta app.

Airlines for America, the industry trade group, is predicting nearly 42 million passengers will fly between Monday, Dec. 17, and Sunday, Jan. 6.

Planes are expected to be about 85 percent full over the holiday period, and the busiest days could reach 90 percent, the trade group said.

The busiest travel days are expected to be Friday through Sunday, the day after Christmas and Jan. 2.

“U.S. carriers are reporting strong bookings relative to capacity this winter holiday period,” said Airlines for America Chief Economist John Heimlich. “This is a great time to travel, as carriers are staffed to accomodate the influx of holiday travelers and air fares remain a bargain, having significantly trailed U.S. inflation.”

December 20, 2012

Canadian Pacific yesterday announced the collective bargaining process with the Teamsters Canada Rail Conference and Rail Traffic Controllers has concluded and a three-year agreement now is in place.

The Class I received the award of a federally appointed arbitrator that includes a cap change on pension growth and a new pension accrual rate for future hires. The agreement is retroactive to January 2012.

CP also announced a five-year agreement reached with the International Brotherhood of Electrical Workers last month has been ratified. The contract takes effect Jan. 1, 2013.

“I am pleased we were able to reach another agreement with a key union,” said CP President and Chief Executive Officer E. Hunter Harrison in a prepared statement. “With our labor situation settled, CP is in very good position to continue the work of being an even more reliable and efficient railway for our customers.”–33733

December 19, 2012

The U.S. Class I workforce grew a tad larger last month. As of mid-November, the large roads employed 162,766 people, a 0.2 percent increase compared with October’s count and 1.7 percent gain versus the year-ago level, according to Surface Transportation Board data.

On a month-over-month basis, three workforce segments registered small declines: transportation (other than train and engine), down 0.6 percent to 6,622; transportation (train and engine), down 0.4 percent to 64,881; and maintenance of way and structures, down 0.1 percent to 37,174. But professional and administrative staff grew 1.9 percent to 14,195, the maintenance of equipment and stores workforce increased 1.2 percent to 30,057, and the number of executives, officials and staff assistants inched up 0.2 percent to 9,837.

On a year-over-year basis, only the transportation (other than T&E) workforce declined, falling 1.7 percent. The number of executives, officials and staff assistants swelled by 4.7 percent; professional and administrative staff members climbed by 2.7 percent; maintenance of way and structures workers increased by 2.2 percent; maintenance of equipment and stores employees grew by 1.5 percent; and transportation (T&E) ranks rose by 1.1 percent.–33697

December 20, 2012

CSX Corp. yesterday announced three key executive appointments that take effect Jan. 1, 2013.

The Class I named Gary Bethel vice president of the Northern Region to succeed Craig King, who is retiring. Currently VP of mechanical, Bethel will report to VP and Chief Transportation Officer Cindy Sanborn.

CSX also named Frank Lonegro VP of mechanical to succeed Bethel. Currently president of CSX Technology, Lonegro will report to Executive VP and Chief Operating Officer Oscar Munoz and continue to be responsible for CSX’s implementation of positive train control.

Finally, the Class I named Kathleen Brandt president of CSX Technology to succeed Lonegro. Brandt, who currently leads the integration of major operating departments and initiatives, also will report to Munoz.

“We continue to build on the strength of our team by putting proven leaders on point for key functions while aggressively developing people for the future,” said Munoz.–33731

December 19, 2012

On a level playing field, American Airlines mechanics and related work groups can compete and perform superior aircraft maintenance compared with anyone in the world, James Little says.

The international president of the Transport Workers Union, Little said the proof is in American’s bankruptcy in which the company – even after recent job cuts – is committed post-bankruptcy to doing more in-house aircraft maintenance work than any major U.S. carrier.

Little was in Tulsa on Tuesday to meet with TWU officials and the Tulsa World editorial board.

At American, 4,600 TWU mechanics and related work on airframe, engine and component maintenance compared with 3,800 at non-union Delta Air Lines, 1,500 at United Airlines, 1,000 at US Airways, 650 at Continental Airlines and 300 at Southwest Airlines, company documents show.

At American, 31 heavy aircraft maintenance lines, mostly in Tulsa, are operating today compared with six at US Airways, three at Southwest, one each at United and Continental and none at Southwest, American officials said.

“Since 2003, our guys have spent time becoming more efficient – turning aircraft (maintenance, from base arrival to departure) in 12 days,” which is a fraction of the turn time at other airlines, Little said.

“The challenge for us is to rachet up the base to capacity, to continue to get the company to take advantage of the space available in Tulsa,” Little said. “Also, to get the (federal) legislature to realize that the base is a significant part of the community, and it would be a shame to see it eroded by (maintenance) work being moved overseas.”

Following American parent AMR Corp.’s bankruptcy filing in November 2011, the company said it needed to cut 13,000 employees, including 2,700 in Tulsa, reduce annual operating costs by $2 billion annually and boost revenue by $1 billion a year to emerge from bankruptcy and compete successfully in the airline industry.

The company has completed much of its restructuring, rejecting or renegotiating aircraft and real estate leases, cutting debt and trimming operations.

But last week, instead of laying off thousands of American employees in Tulsa, American cut 43 TWU workers.

Previously, 30 Tulsa-based TWU mechanics and related workers were laid off, TWU Local 514 executives said.

The difference between American’s original targeted layoffs and those to date were made up by dozens of licensed mechanics accepting reduced wages as overhaul support mechanics, 773 mechanics accepting early-retirement incentives and 70 mechanics and related workers accepting positions at other bases, union officials said.

But there would be more work at the Tulsa base and other U.S. airlines if the federal government would impose the same standards on domestic third-party and foreign maintenance providers, TWU executives said.

The Office of Inspector General of the U.S. Department of Transportation has found there are 4,159 domestic and 709 foreign aircraft repair stations certificated by the Federal Aviation Administration to perform maintenance on U.S. aircraft.

Yet, there are about 100 FAA inspectors for the 709 aircraft repair stations outside the United States, compared with about 4,000 FAA inspectors for 4,159 U.S. repair stations, the IG report found.

“For example, over a three-year period, CMO (FAA certificate management office) inspectors for an air carrier inspected only four of its 15 substantial maintenance providers,” the IG said in a September 2008 report to the FAA. “Among those uninspected was a major foreign engine repair facility. CMO inspectors did not visit this facility until five years after FAA approved this facility for carrier use – even though the repair station had worked on 39 of the 53 engines repaired for the air carrier.”

Little said it gets worse.

Unlike American and other U.S. airlines and their mechanics, foreign aircraft repair facilities are not required to undergo unannounced FAA inspections or perform security background checks and drug and alcohol testing on mechanics, federal documents show.

“They need to have the same oversight by the FAA as our facilities,” Little said. “When you look at overseas maintenance, the FAA’s not there. So how effective is their oversight?

“And there is a cost for safety. When the work comes back to the U.S. and it has to be re-worked or components have to be changed out, that (foreign) work is not documented. It’s only documented in the U.S.”

Little believes American must merge with another carrier because its route system and domestic feed is not adequate to support its international network.

The TWU and American’s Allied Pilots Association and the Association of Professional Flight Attendants have endorsed a merger with US Airways.

The three unions last spring agreed to term sheets with US Airways that would be effective contracts in the event of a merger between American and Tempe, Ariz.-based US Airways.

“We don’t think American can stand alone,” Little said. “Even (American CEO Thomas) Horton has said a merger sometime in the future is inevitable.”

Asked which course is preferable – merger within, or outside, bankruptcy, merger with US Airways or another carrier – for the TWU and American labor, Little was equivocal.

“There are too many open ends to make a judgment,” Little said. “How much equity (from each airline) is involved? We haven’t seen the total business plan for American. US Airways is committed to build up Tulsa, to keep it at 90 percent capacity. But US Airways doesn’t know what they’re committing to – the (labor) deals were made without the data they got in the non-disclosure agreement.”

In August, the two airlines signed non-disclosure agreements under which they may exchange proprietary financial data.

The non-disclosure agreements are due to expire in January, officials said.

December 19, 2012

American Airlines is set to benefit from a new codeshare agreement with LATAM Airlines Group, signing deals with Sao Paulo-based TAM Airlines and Bogota-based LAN Colombia.

Under the agreement, new routes between Dallas/Fort Worth and Bogota, and from Miami to Curitiba and Porto Alegre, Brazil will begin operations in late 2013.

The deal reflects American’s mission to enhance its expanding network throughout Latin America, providing customers with more options and flexibility.

“American’s new partnerships with TAM and LAN Colombia further strengthens our longstanding relationship with LATAM Airlines Group, Latin America’s largest and most premier airline group,” American Airlines chief commercial officer Virasb Vahidi said.

“As we continue to expand our presence in Latin America, the new routes to Brazil and Colombia are a direct response to the increasing customer demand for travel between the U.S. and Latin America.”

American Airlines now offers more services to South America than any other US airline and boasts the most services between North America and Brazil.

With the addition of new destinations including Boston, Chicago, Dallas/Fort Worth, Las Vegas and Seattle, LATAM Airlines’ connectivity with the US will also be greatly improved.

“The United States is a very important market for Colombia. More than 105,000 Colombian passengers currently travel to the US each year – for tourism or business,” LAN Colombia executive director Hernán Pasman said.

“As a result, this agreement strengthens the airline’s position in North America and offers more options by which Colombian passengers can take advantage of the network of more than 40 destinations that will be offered through the codeshare with American Airlines in North America.”