Another Low-Cost Carrier Fails

by Josh Lew on

Low-cost-carrier LTE ceased to operate today because of its financial predicament. The Spanish carrier stopped booking flights on Thursday, but some would-be holidaymakers were left with luggage in hand, waiting to get from rainy England to the sunny Canaries. LTE specialized in such routes and worked closely with several English tour operators.

LTE was not a newcomer to the LCC game. It has been operating for 20 years and, though its executives claim that they are trying to find a solution to their financial woes, the current state of the industry isn’t going to lend itself to any quick recoveries. Thomas Cooke Airlines, a charter service based in Manchester, is among the players stepping in to service LTE’s passengers and the tour operators that relied on the now defunct airline in the past. With European LCCs coming and going (mostly going, these days), one can almost hear Elton John crooning “The Circle of Life.” when all is said and done, the biggest beast, Ryanair and EasyJet, might be the only survivors.

Iceland on the cheap: Am I the worst person in the world?

by Jerry Guo on

So I just took advantage of Grant’s tipoff last week to $400 roundtrip airfare to Iceland. I’m flying out of Boston the weekend before Thanksgiving, and staying for a week. And I believe my flight came out to something like $550, not bad at all for a departure on Saturday and return on Sunday.

Now I’m trying to scoop up some dirt-cheap hotel rooms, a rental car, and hmm, maybe a mid-sized bank somewhere. Yes, I do feel a bit awkward just parachuting into a country that’s, according to news today, running out of food in 3-5 weeks.

It’s a beautiful country, but I’m almost more excited to go walk down Main Street and just see what a “bankrupt” country is like, in the dead of winter no less. I mean, when does that ever happen? Or did I just speak too soon.

On a related note, I’m working on a research paper about Iceland’s economic collapse, and it’s somewhat humorous to read the predictions made by distinguished economists from just a couple years back. Take this one from 2006, posted on the Icelandic consulate’s website:

“Recent volatility in Iceland’s asset markets has raised concerns about the fragility of Iceland’s economy,” comment Frederic S. Mishkin and his co-author Tryggvi T. Herberrtsson in their report, “Financial Stability in Iceland.” But these concerns, particularly those that raise comparisons with certain financial issues in emerging market countries, are “misguided.”

Ha! Oh, that reminds me. I have to go get a visa from that consulate … whoops.

Alitalia may start canceling flights — can’t afford fuel

by Grant Martin on

Alitalia has been going through a bit of a rough patch of late. Even before the fuel crisis this past summer, Italy’s national airline was already struggling with poor service, unhappy unions and terrible management. Now, with costs going through the roof the airline is in some serious financial trouble.

Through the course of the summer, Alitalia has been looking for ways out of it’s tangle. For a while, we thought that Air France and KLM, the French and Dutch Skyteam partners, were going to usurp their counterparts, until unions and politicians weighed in on the deal and the buyers decided to back out.

Since then, the Italian government has been arguing about a few different options including a government takeover, but none have really matured to the point of stability.

Which brings us to Monday morning, which, after months of squabbling and mismanagement, has led to the airline still without strong leadership, with angry unions and with not enough fuel to fill its airplanes. According to the BBC, unless the airline comes up with some some significant cash or a strategy today, they “cannot guarantee” flights into the week.

As of this morning the airline is still in talks to be taken over by a Italian consortium of companies (including Benetton?) and merge with AirOne with plans to cut over 3,000 jobs, but nothing has been finalized. Keep an eye on your Alitalia flight if you’ve got one booked in the next week. It could be a rough week.

10 tips for smarter flying


United went bankrupt? Wait. What?

by Grant Martin on

All hell broke loose this morning on Wall Street when word accidentally slipped out that United Airlines had declared bankruptcy. Apparently Bloomberg and a few other agencies accidentally picked up a story from several years back talking about United’s financial woes, then thinking it was fresh news investors started dumping the stock. At 11:30 this morning, at $0.01 per share, the stock was suspended.

Meanwhile, United spokespeople are wildly trying to refute claims that the company has gone bankrupt and there’s still confusion among investors about what really happened.

Amidst the trading debacle, apparently one member of Flyertalk bought in for 10,000 shares at $0.01 per share. As trading resumed later in the afternoon (currently at $10.92), he’s since made $10.91 per share. I’ll let you do the math on that profit.

Midwest Airlines cuts 40% of workforce

by Grant Martin on

Further adding to the speculation about the future of Midwest Airlines, the embattled airline today announced that it is cutting forty percent of its workforce via furloughs and layoffs. In light of the escalating fuel crisis, this cut follows the announcement that it will be grounding all of its MD-80 aircraft.

Sad news for a small airline that is struggling to make its mark in the ultra competitive and expensive market that currently is the airline industry. Will they make it through the oil surge?

Over the Fourth of July weekend my girlfriend flew Midwest through Kansas City and generally had good things to say about the airline. Seats are nice, leather and spacious while food and beverage is not only existent and free but also quite supple. Her main observation? “There are only like ten people on this flight.”

If, even over a holiday weekend, you can’t fill up your planes, then you either have a serious pricing or a serious consumer confidence problem. Why? Since many people have been hearing rumors about the airline going under, demand for tickets has probably gone down. What’s an airline to do to inspire confidence?

Well, you could always promise 100% refunds on your tickets if you liquidate. With so many people booking flights and losing their money on flops like Skybus and Maxjet, I think that the least they deserve is a guarantee that they’ll get their money back if you take the plunge.