Alaska Airlines Giving the Boot to Virgin America Brand; So Not Cool-atta: Frozen Drink Going Away; Disney Can’t Shake Iger. And it Doesn’t Seem to Want to

So long…

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If you’re anything you’re like me, then I bet you look forward to those fun safety videos played on Virgin America flights. But alas, come 2019, those videos might just become a sweet memory as Alaska Airlines plans to retire the Virgin America brand at that time. Apparently, extensive accounting research was done to arrive at this conclusion. That conclusion being that if Alaska Airlines wants to be successful on the West Coast after throwing down $2.6 million to merge/acquire Virgin America, then it would be prudent to stick with one name. And considering that Alaska Airlines is the one paying all that money, it’s only fair, I suppose, that it should get to stick with its own name. Alaska Airlines, however, has promised to keep the mood lighting, music and other features that made Virgin America more fun than other airlines. Virgin America will be joining the not-so-distinguished-anymore ranks of Continental Airlines and US Airways, whose names also used to grace airports all over the country. Once the merger is finalized, Alaska Airlines will have the dubious distinction of being the fifth largest airline in the country.

Just not good enough…

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After much soul-searching and presumably a lot of accounting research – Dunkin’ Donuts is ditching the Coolatta drink that refreshed so many parched palates over the years. The official word on why Dunkin’ Donuts is ditching the beverage is because it “…isn’t good enough.” It doesn’t get more scientific than that. But fear not Dunkin’-lovers, as the donut chain will not leave you empty-handed and un-caffeinated. Enter the “Frozen Dunkin’ Coffee.” Sure the name lacks the “cool” vibe of its predecessor, but its rumored to have a lot more coffee in it. In fact, part of the push for the new beverage has to do with the fact that special new brews are all the rage right now. And naturally Dunkin’ wants to cash in on that momentum. Also be on the lookout for the Dunkin’ Energy Punch and the Caramel Shaved Ice Espresso, among other new offerings. As for social media, plenty of Dunkin devotees didn’t take too kindly to the announcement with one disgruntled Coolatta drinker writing: “@DunkinDonuts getting rid of the coffee coolatta? Are you insane?” Nuff’ said.

So hard to say goodbye…

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Apparently Disney is super pleased with Bob Iger’s performance since the House of Mouse just extended the CEO’s contract until 2019 (when the Virgin America name will be retired. Coincidence? I think not. Really. I don’t) Actually it’s because Disney still hasn’t found a suitable replacement for Iger. The plan was for Iger to only stay on in his post until 2018. But since there’s no heir in the wings just yet, it was thought best to hold onto him until that could be determined. Former Disney COO Tom Staggs was rumored to be the one to fill that role, but then he left, leaving Disney to go back to the drawing board. This is the third time an extension was added to Iger’s contract. And who can blame Disney. Whoever replaces Iger is going to have some massive shoes to fill and will constantly find themselves being compared to a CEO whose leadership the board calls “outstanding.” In fact, under this outstanding leadership for the last ten years, Disney became the first movie studio to hit the $7 billion ceiling for global box office receipts. News of this latest extension sent the company stock up. Which makes perfect sense since during Iger’s tenure, investors took in a 448% return on Disney shares.

Trump Must Say Buh-bye to DC Namesake Hotel; Amazon’s Latest Tricks Up its Sleeve; The Urge to Merge: Alaska Airlines and Virgin America

Give it up…

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The official word out of Washington DC and, more importantly, the General Services Administration (GSA), is that Donald Trump has to give up his beloved hotel that is housed in the Old Post Office, just a few blocks from the White House. It’s the one that he opened back in September and has been the site for so very many Trump protests. That particular building is especially off limits to the President-elect because it is leased from the Federal government. The GSA, in case you were wondering, manages property owned by the Federal government. So it stands to reason that it has a say in what Donald Trump can and can’t do in this particular situation. Incidentally, Federal law does not exactly prohibit a president’s involvement in private business. However, members of Congress and lower ranked executive branch officials cannot. So weird, huh? As for a president’s assets, those have been typically put into blind trusts in an effort to avoid any appearance of impropriety – which seems logical. The owners of these blind trusts have no knowledge of how the assets are being managed and are typically managed by independent third parties. Donald Trump’s daughter, Ivanka, has apparently been dealing with the GSA to resolve this particular issue. However, her involvement is sort of iffy, according to some, since she is an official member of Trump’s transition team.

Droning on and on…

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Amazon’s unleashing plenty of big news today while Jeff Bezos is kicking up his heels at Trump Tower, trying to make nice with the President-elect. First, the online retailer giant announced its first drone delivery, called Prime Air, which took place December 7 in the U.K. A Fire TV device, along with a bag of popcorn found its way to its buyer just thirteen minutes after the order was made. The drop was made in an area in Cambridge that has been authorized for drone testing. So far, two customers have access to this new delivery method. But in the coming months that number is expected to grow by leaps and bounds. The drones fly no higher than 400 feet, are guided by GPS and can carry up to five pounds of merchandise. But best of all, for Amazon anyway, is that drone delivery of small packages are an excellent way to keep delivery costs really low. How does a dollar a drop sound?  Then, Amazon also announced the launch of its very own live streaming video service available just about everywhere. Except China. That must warm Donald Trump’s heart a little.  In any case, the new service is giving Netflix   – which also has yet to conquer China – some very unwanted competition. By the way, Amazon’s launch was eerily reminiscent of Netflix’s global launch almost a year ago. Just saying. The new service, aptly called Prime Video, would get bundled with your average Amazon Prime subscription. The idea is to get people to sign up for Amazon Prime service and from watching all of Amazon’s amazing (it really is) programming, viewers will then have an insatiable urge to buy even more stuff on Amazon. It’s meant to be a win-win. Just not necessarily for your bank account. In Amazon’s defense, however, the company wants to make sure that you’re getting a lot of value from your annual Prime subscription. I can live with that.

Take wing…

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The Alaska Airlines/Virgin America merger is in effect with the official blessing from the U.S. Justice Department. But to be clear, Alaska Airlines is actually buying Virgin America – which has only been around since 2007 –  for about $2.6 billion. The total cost, after all is said and done, is expected to hit closer to $4 billion.  Alaska Airlines is currently the sixth biggest airline operator in the United States, while Virgin America holds steady at number eight. But once these two babies unite, they’ll become the fifth largest airline in the industry. The top four airlines, however, still control 80% of the country’s domestic market. At least the merger will allow for the new entity to become a major player in the highly competitive West Coast region. Combined, the two airlines have around 40 million customers and have so far this year generated $2.4 billion in revenue.

Banking Scandal or Ben Affleck Movie?; Airline Ranks and Tanks; Drones to the Rescue

Who gets the movie rights?

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The latest scandal to come out of the banking world has its very own name – “The Panama Papers.” It seems a Panamanian law firm called Mossack Fonseca helped a slew of politicians, celebrities, businessman etc. to create offshore accounts and shell companies for the last forty years. It’s estimated that 500 banks all over the world enlisted the help and resources of Mossack Fonseca to help them set up these shell companies since 1977. Fast forward to a year ago when an anonymous source leaked some 11 million documents to Germany’s biggest newspaper, Suddeutsche Zeitung, which then enlisted the help of the International Consortium of Investigative Journalists. The ICIJ shared information and hunted down leads for over a year in an effort to publicize “The Panama Papers” that contain information on some 214,000 offshore companies. The documents also have plenty of unflattering details about Russian President Vladimir Putin, FIFA officials and over 30 other people and companies that are blacklisted by the U.S. government. These include people indicted for corruption and have ties to drug trafficking and terrorism. Strangely enough, Mossack Fonseco only seems to know the true identities of just over 200 companies out of the over 14,000 that the firm managed to incorporate just in the Seychelles. Now banks across Europe find themselves under the microscope as regulators try to establish if and how those banks found ways to hide assets. The Kremlin, ironically, is calling the allegations “a series of fibs” and thinks its just an attempt to thwart Putins chances in upcoming elections, which are said to be rigged anyway. FIFA, another group that could use a lesson or two on business ethics, called the allegations “ridiculous.” To be fair, it’s not clear to certain people that any actual illegal activity occurred. Of course the banks denied any wrongdoing while Mossack Fonseca calls itself the victim of a data breach.

Bumpy landing…

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Results are in for the Airline Quality Rating and you might just be surprised. Or not. Virgin America took the top spot, even earning the best score in the baggage handling rate category. While Virgin America no doubt takes pride in getting the best ranking, Sir Richard Branson is not exactly celebrating considering Alaska Airlines is buying him out for $2.6 billion. Alaska Airlines, by the way, is paying $57 in cash per share, – a 47% premium over Virgin America’s closing price on Friday. Incidentally, Alaska Airlines came in fifth, though it was ranked highest when it came to fewest customer complaints. But it is anyone’s guess how this buyout will impact Virgin America’s rating next year. In any case, JetBlue came in at number two with Delta, shockingly enough, earning a very respectable third place ranking. Overall industry performance improved slightly. Really slightly. Six carriers actually improved, while another six did not. Spirit came in dead last, but in all fairness, Spirit is new to the list. Also in all fairness, Spirit ranked the highest in customer complaints, which makes sense considering that its culture is best described as “take it or leave it.” Amerian Airlines plunged three spots from last year to number 10. Which sounds about right. American, by the way, is the largest carrier in the world, just not on the United States. United is and yet it doesn’t exactly boast an enthusiastic following. Hawaiian Airlines ranked number one for on-time performance. And that’s really great. Especially if you’re going to Hawaii. Which unfortunately, I am not.

Start-up STAT…

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Bay Area start-up Zipline just scored $18 million in funding  – but not from just any investors.  Microsoft co-founder Paul Allen and Yahoo Founder Jerry Yang saw fit to plunk down tons of cash for the drone company but the question is: what makes this drone company different from all the other drone companies? At least for Paul Allen and Jerry Yang. I suppose it has something to do with the fact that Zipline founder Keller Rinaudo is using his drone technology not for delivering books and groceries, but rather to save lives in third-world countries. Zipline’s drones will be delivering blood and much-needed medical supplies to remote, hard-to-reach areas in Rwanda. Rinaudo, a Harvard-trained scientist said that there is “nothing more precious than blood and medicine” and plans on making those items much more accesible than they have ever been. He also wisely pointed out: “Getting medicine to remote places is both a huge market and a global challenge.” As of now places in Rwanada get resupplied a few times a year. But Rinaudo is planning for his drones to make up to 150 drops a day come July. The government of Rwanda is footing the bill to make that happen. And unlike many other types of drones that can’t operate properly in inclement weather, Zipline’s drones can, are able to carry up to 3.5 lbs. and fly within a 75 mile range. Considering that Rwanda is one of the poorest nations in the world, it will become the first country to employ commercial drone delivery, all while Amazon and other companies continue fighting regulatory battles and FAA hurdles.

 

Michael Bolton: IRS = Anus of Our Country; NY AG Schneiderman Takes Issues With Shifty Shift Practices; Rank and File: Airlines Get Graded

How am I supposed to live without you?

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With tax day on Wednesday, John Oliver, host of HBO’s Last Week Tonight thoughtfully explained our national aversion to taxes and the IRS: namely, they involve “someone taking our money and math.” To further complicate things and strengthen our aversion, Congress has drastically cut funding to the IRS, causing activity at the agency to come to an almost virtual standstill. Mr. Oliver urged us to redirect our anger, rage and frustration at Congress and not the folks at the IRS who perform “a dangerously boring job.” So what better way to pay tribute to the IRS than to call it the “anus of our country” which is precisely what, crooner Michael Bolton did, on John Oliver’s show, when he sang a not-so-moving ballad that was sort of meant to be a show  “… of reluctant support for their appropriate funding.”  To help taxpayers truly grasp the anus/IRS comparison, Mr. Oliver articulately explained that we should, “Think of our government as a body. The IRS is the anus: It’s nobody’s favorite part, but you need that thing working properly or everything goes to s–t real quick.” Pure poetry.

Oh shift!

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More than a dozen retailers are getting probed for some shifty shift scheduling practices that are not only downright rude, but according to New York Attorney General Eric Schneiderman, might just be illegal, as well. The practice in question, dubbed”on-call shifts” basically lets hourly wage employees know if they will be working only hours before they need to show up for work. The practice is not cool for so many reasons. First, for many employees, the practice does not give them ample time to make care-giving arrangements for children and and elders in their care. “On-call shifts” also don’t allow for employees to make other arrangements for alternative sources of income.  If an employee reports for work for which they had been scheduled, then according to New York State law, that employee is entitled to be paid for four hours of work at basic minimum wage. Some of the big retailers who were sent letters about their shift scheduling practices include Target, The Gap, Abercrombie & Fitch, J.C. Penney and J. Crew.

Would you like some pretzels with that?

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The 25th annual Airline Quality Report is out and the least shocking observation on it is Virgin America taking the top spot for the third year in a row. If you’ve ever flown Virgin America, and also American Airlines, then you’ll clearly see why Virgin America gets the top spot while American – which merged with US Airways – doesn’t. However, American still managed to snag the number seven spot. A bit high, if you ask me. In fact, I am shocked that American isn’t in last place. Its regionally operated Envoy/American Eagle airline does place last, though. Yikes. The report, which measures airline performance quality, takes into account four major aspects – or as the pros say “core elements”: on-time performance, involuntary denied boardings, mishandled baggage and customer complaints. No doubt, if the AQR measured how travelers were treated, I am certain American/US Airways would have claimed the last spot. In any case, Hawaiian Airlines came in at number. Too bad it doesnt fly anywhere I need to go. Delta took the number three spot, the only large carrier to break into the top four, while some were left scratching their heads over JetBlue’s fourth place ranking, since the airline came in second last year.

 

Snapchat-ting all the Way to the Bank; HSBC Is In Big Trouble, Yet Again; Virgin America’s Soarin Good Earnings

And just like that it disappears…

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Hindsight is 20/20 but in Snapachat’s case it’s more like 19 – as in billions of dollars. The social media and messaging app, which very presciently declined Facebook’s offer to buy them for a paltry $3 billion back in 2013, is rumored to be adding an additional $500 million to its coffers. This will now peg the company at between $16-$19 billion and could make it the second most valuable privately held company behind Über technologies and Chinese smartphone maker Xiaomi. Started in 2011 and helmed by CEO Evan Spiegel, the app allows users to post pictures and messages that disappear within a few seconds after being opened. Snapchat boasts 100 million users and it should come as no surprise that 57% of its users are under the age of 25. Of course, its disappearing act is not the app’s only trick as it now has deals with, among others, Yahoo, CNN, ESPN…the list goes on, tailoring content just for you. Even movie studios are getting in on the Snapchat action and before long you’ll see Snapchat’s very own superhero series. If that doesn’t scream street cred, then I don’t know what does.

Don’t bank on it…

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There’s nothing like a little money laundering investigation to put a downer on your week. Well in HSBC’s case it’s “aggravated money laundering” which sounds so much more sinister than just plain old “money laundering.” This latest criminal investigation comes a week after the revelation that it helped some of its super wealthy clients and their 1,100 bank accounts, evade taxes. HSBC is on a roll, I tell you. Investigators suspected that if HSBC was helping its clients avoid paying taxes, then what else might it be helping their clients do? Hence, we have the money-laundering investigation.  A Swiss public prosecutor launched a criminal probe into the matter and has since raided the picturesque offices of HSBC. Good thing that former HSBC IT employee, Herve Falciani, very thoughtfully collected all those files pointing investigators into launching an investigation. Too bad he tried to sell the information first, though. That kind of looked bad for him. But probably not as bas as how it’s looking for HSBC right now. Of course, HSBC is said to be cooperating. Whatever that means. Do banks ever not cooperate?  HSBC did, however, sort of acknowledge it messed up on the tax evasion end blaming the fact that stringent standards weren’t in place as they should have been. You don’t say.

Flyin’ high…

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If you’ve ever flown Virgin America, then it might come as no surprise (or maybe it will) that the airline just whipped Wall Street expectations with a little help from cheaper oil prices and fully booked planes. The airline only made its Wall Street IPO debut back in November but so far it has not disappointed as the airline took in $1.16 per share – a far cry from the 80 cents Wall Street expected it would earn. Revenue for the fourth quarter was $372.2 – a 3.4% increase over last year at this time, impressively taking down analyst estimates of $370.8 million. Started by billionaire Sir Richard Branson, the airline just announced big plans to give Southwest Airlines a very unwelcome run for its money by offering non-stop flights to Austin. Let’s just hope this little battle pays off for the passengers too.

Passengers Are Getting Bagged, The Loan Danger and The Not So Magical Magic of Macy’s

Bagging it…

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Results of the JD Power & Associates 2014 Airline Satisfaction study were just released. 11,370 travelers were surveyed. I was not among the surveyed. Out of a possible 1000 points, the industry as a whole scored 712, which is actually a 17 point increase over last year. Again, I was not one of the people surveyed. There were seven categories that were rated some of which include cost and fees, crew and aircraft. According to Rick Garlick, head of J.D. Power’s travel and hospitality practice, “It isn’t that passengers are satisfied with fees; it’s that they are simply less dissatisfied because they realize that fees have become a way of life with air travel.” Apparently 44% of travelers feel this way. I am of the 56%. Noticeably absent from the list was Virgin America. Sir Richard Branson’s airline does not yet qualify for the survey and the other airlines should be grateful for that. Alaska Airlines came in first for traditional airlines. Shockingly enough, American Airlines came in third (and not last!). Once again, I was not given the survey. Jet Blue ranked first in low-cost airlines. However, I find that Jet Blue tends to charge just as much as “traditional” airlines. US Airways came in last.

Student groans…

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Just when you thought having to take out student loans was irritating enough, a new study, courtesy of the Pew Research Center, adds salt to the borrowers fiscal wounds. The study disconcertingly found that student borrowers don’t earn nearly as much as their debt-free peers. As if the socio-economic divide wasn’t enough to highlight the difference between the haves from the have-nots, the burden of having to pay back those education loans, which are exceeding the $1 trillion mark, are trumping the demand for home loans. Hence, the mortgage market is suffering some blows as well. All that money tied up in loans in the name of higher education are dragging down the US ecnomony even more than (gasp!) credit card debt. Because borrowers have a harder time building up assets, their debts tend to lead to more debt. The median net worth of a young household (young being under 40 years old) paying off student loans is $8,700 while a debt free young household has a median net worth of $64,700. But on the bright side – if you can call it that – college-educated households tend to earn twice as much income than a home sans college degrees.

Macy’s retail tale…

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Oh the magic of Macy’s, as the slogan goes. But it wasn’t that magical as their first quarter revenues fell 1.7% to $6.28 billion, which the 85 year old department store is attributing to the nasty winter that wreaked havoc on our lives and economy. However, first quarter net income rose 3% to $224 million, up $7 million from a year earlier thanks to lowered sales. It also beat analysts expectations which is always fun to watch when that happens. Its confidence in its ability to sell sell sell must be pretty intense since they increased their dividend. They’re also planning on putting big chunks of money into e-commerce.  Macy’s has about 840 stores nationwide.