ACTE To Ask E.C. To Join Fight Against IATA RulesThe Association of Corporate Travel Executives is courting the European Union as an ally in its fight against International Air Transport Association regulations in Europe, hoping to upend what it called "outdated" and costly rules. ACTE, in conjunction with other travel interest groups, has been in discussions with IATA to little avail. It now is "taking the fight to a higher level," ACTE leaders said in a memo soliciting signatures for a petition it plans to send to European Commission president Romano Prodi, following its global conference this week in Stockholm. "As representatives of one of the largest segments of commerce in the EMEA region—the business travel sector—we are compelled to advise you that IATA is costing European companies a conservative e1 billion annually through outdated regulations and procedures," the petition stated. ACTE said it wants to further modify tariff structures and standardize faring, "regardless of booking or ticketing location," and remove restrictions on cross-border booking and ticketing. Petitioners also request that IATA set up a pan-European bank settlement plan, similar to ARC in the United States, as well as standardize travel agent accreditation requirements and application processes in Europe.
Buyer Concern About Hotel Room Availability GrowsMore than 40 percent of 200 travel managers polled in a September survey by Wall Street firm Smith Barney said they had to book hotel rooms earlier to ensure availability. Given their improved demand picture, hotels are getting tougher about granting last room availability to buyers who have not paid a premium in rate for the privilege. How bad the situation might get still depends on the destination in question. In the top U.S. market, New York, Bjorn Hanson, global head of PricewaterhouseCoopers' hospitality and leisure practice, forecast upwards of 60 sold-out nights next year. With negotiations for 2005 rates underway, 60 percent of respondents to the Smith Barney survey said hotels are becoming tougher on pricing. In a June survey, 52 percent viewed hotels as tightening their policies, but the bid season at that point had not yet begun.
Lenders Give US Airways Another ReprieveBankrupt US Airways last week reached a new agreement with lenders and the Air Transportation Stabilization Board to continue accessing nearly $750 million in restricted cash set aside as collateral for a loan package backed by the federal government. Access to those funds had been set to expire last Friday. In bankruptcy court documents filed last week, US Airways detailed "an immediate need to have continued access to the cash collateral in order to continue operations." The judge overseeing the carrier's bankruptcy approved the deal but at press time had not ruled on the carrier's motion for emergency interim labor cost reductions, which are a condition of the new agreement with lenders. In exchange for the extension, set to expire Jan. 14, US Airways agreed to numerous conditions, such as specific pre-tax earnings targets and weekly minimum unrestricted cash balances. ATSB this spring adjusted terms of a $1 billion loan package US Airways used to emerge from bankruptcy in March 2003
(BTN, March 29).Northwest Reaches Tentative Accord With PilotsNorthwest Airlines late last week announced a new agreement with the Air Line Pilots Association that would save the carrier a total of $300 million annually. The agreement first must be approved by ALPA's Master Executive Council and ratified by union members. It also is contingent on Northwest restructuring a revolving credit facility of nearly $1 billion. The deal is seen as a key development for the airline to avoid bankruptcy. Northwest continues to negotiate with its other unions.
Major Airlines To Report Dismal Third-Quarter EarningsDriven by high fuel prices, severe pricing competition and excess capacity, U.S. carriers are beginning to report third-quarter financial numbers that will be worse than initially anticipated. J.P. Morgan Securities analyst Jamie Baker said the bad news is that an expected $1.2 billion in losses "will just barely improve upon the other worst third quarters on record," and that the industry would have posted a $200 million profit had oil prices been at last year's levels. The good news, he said, is that industry costs excluding fuel "are at a seven-year low, likely headed lower." Southwest Airlines last week was the first major U.S. carrier to report on third-quarter financial performance. The carrier posted net income of $119 million, which improved on last year's results and beat Wall Street estimates.