From QUINTESSENTIAL JETS

May 11 (Bloomberg) — British Airways Plc Chief Executive Officer Willie Walsh must decide whether to stand his ground against cabin crew workers and ride out a strike that may cost the equivalent of 75 percent of projected annual profit.

The Unite union, which yesterday called four five-day walkouts starting May 18, says the carrier must reinstate free travel and take back fired workers to win consideration for a pay plan that’s “an improvement” on previous offers. British Airways said the pay offer is “very fair.”

The strike may cost 150 million pounds ($223 million), including business lost on the single days between walkouts, based on the 45 million-pound expense of seven days of stoppages in March. Analysts estimates are for a 205 million-pound operating profit in the fiscal year that began April 1.

“As a hit to profits it’s painful, but as a drain on cash it’s manageable,” said Douglas McNeill at Charles Stanley Securities in London. “It would be treated as a one-off, so I think investors would be tolerant.”

British Airways has a cash balance of 1.6 billion pounds, Chief Financial Officer Keith Williams said in February.

British Airways fell 1.8 percent to close at 200 pence in London trading. The stock has declined about 5 percent since Feb. 19, the last day of trading before Unite announced the first strike.

Airline shares have also been hurt by repeated shutdowns of the Europe’s airspace following the eruption of Iceland’s Eyjafjallajökull volcano on April 14. Traffic at British Airways fell 22 percent last month, with dust disruption likely to cost the company about 100 million pounds, according to Williams.

‘Witch Hunt’

About 81 percent of cabin crew voting in a ballot on the latest pay offer followed Unite’s advice to reject the deal, the union said last week. British Airways made no new proposals over the weekend, the union said yesterday, adding that there can be no agreement “while management victimizes trade unionists and uses disciplinary procedures in a witch hunt.”

Unite is open to further talks, spokeswoman Pauline Doyle said today in an e-mail. “Our door remains open,” she said.

London-based British Airways, Europe’s third-biggest carrier, said in a statement yesterday that it is “saddened but not surprised” by the new strike call.

Pilots to Work

The British Airline Pilots’ Association said yesterday that it would work normally through any strike, adding that “it is for all groups within BA to make a contribution.” The labor group last year reached a deal with British Airways which it says gives the company annual savings of 25 million pounds.

Walsh cut cabin crew staffing levels in November without union approval in an effort to save 127 million pounds after the global recession hurt demand for air travel. While business trips have picked up in recent months, British Airways may suffer a record 600 million-pound pretax loss for the year ended March 31. The company is due to report results on May 21.

Andy Harrison, CEO at EasyJet Plc, Europe’s second-largest discount carrier, said on a conference call with reporters today that his airline may benefit by a “few million pounds” from the British Airways strike as customers switch flights.

“Things are improving, but it’s important that all airlines come out of this crisis more efficient than when they went into it,” said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin with an “outperform” rating on British Airways stock. “BA crews are still less efficient compared with many other airlines.”

Lufthansa Dispute

British Airways is not alone in facing labor unrest as it seeks to renegotiate contracts with its staff.

Deutsche Lufthansa AG, Europe’s No. 2 carrier after Air France-KLM Group, is in talks with the Vereinigung Cockpit pilot union after a walkout grounded flights in February. An agreement on the deployment of lower-paid crews is “realistic” in coming weeks, union spokesman Joerg Handwerg said today by telephone.

British Airways says London’s Gatwick and City airports will operate as normal during the coming five-day strikes, which will also run from May 24, May 30 and June 5.

The carrier also aims to provide a “substantial part” of its long-haul timetable from London Heathrow, together with at least some daily service to short-haul destinations. That will once again involve leasing in planes and crews and booking thousands of customers onto other airlines, it said.

“I very much doubt that Unite can stage a successful strike of this duration,” McNeill said. “Asking cabin crew to forfeit a month of wages seems to me to be a big ask.”

By Steve Rothwell, Bloomberg

The Brazilian real’s slump after a record gain in 2009 may affect operations in coming quarters of Gol Linhas Aereas Inteligentes, the nation’s largest airline, Chief Executive Officer Constantino de Oliveira Jr. said.

Gol reported yesterday that first-quarter profit fell 61 percent after a decline in the real against the dollar increased the cost of financing its debt denominated in the U.S. currency. The real tumbled 6 percent so far this year after surging 33 percent in 2009 and is headed for its worst week in 18 months.

“The company’s debt and investments are tied to the dollar,” Oliveira Jr. said in an interview at Gol’s headquarters in São Paulo. “If the dollar’s tendency of rising is maintained, it will probably impact the company’s operations in the next quarters.”

To compensate for higher costs related to acquisitions and the maintenance of airplanes, the company could reduce other expenses, or increase fare prices, Oliveira Jr., 41, said. Brazil’s biggest airline by market value has $225 million in dollar-denominated bonds due in 2017 and $200 million due in 2049, according to data compiled by Bloomberg.

The Sao Paulo-based company also has 400 million reais ($215.6 million) in local-currency bonds maturing in 2011.

Gol rose 0.7 percent to 11.81 reais as of 11:45 a.m. New York time after tumbling 5.4 percent yesterday. The shares plunged 16 percent this year, compared with a 7.5 percent decline in the benchmark Bovespa.

The company said today total occupancy rates rose in April from a year earlier, according to a regulatory filing. The load factor, or the percentage of seats taken, increased to 63.2 percent from 58.7 percent a year earlier.

Currency Hedge

Gol hedges its operational expenses, not its debt, against risks related to foreign-exchange volatility, Oliveira Jr. said. “The dollar-denominated debt is long-term debt and the hedge costs would be impracticable,” he said.

The company expects oil this year to be between $80 and $84 per barrel. Gol expects the real to trade around 1.84 per dollar, Oliveira Jr. said.

Gol would consider investing in airports in case existing facilities are sold to private investors, Oliveira Jr. said. Currently, Brazilian rules don’t allow such investment, he said.

Airport Investment

“Gol’s main business is air transportation but, if it is necessary to build a terminal or invest in infrastructure, we are available to contribute,” Oliveira Jr. said.

The airline plans to open two stores in Sao Paulo, including one at a bus station, to sell tickets and help attract the country’s growing middle class that doesn’t use the Internet, Oliveira Jr. said. Brazil’s middle class grew to 53 percent of the population in 2009, from 42 percent in 2002, Finance Minister Guido Mantega said during a speech in New York April 26.

Domestic air traffic in Brazil jumped 35 percent, almost triple the 13 percent first-quarter gain in international travel, the country’s civil aviation agency reported April 14 on its Web site. Airlines in Brazil also filled more seats on each flight, according to the regulator, known as Anac.

Gol and Tam SA together control 83 percent of Brazil’s domestic air travel, with Sao Paulo-based Tam leading with a market-share advantage of less than 0.5 percentage point, according to Anac. Tam is scheduled to announce first-quarter earnings May 14.

By Felipe Frisch and Fabiola Moura, Bloomberg

SANTIAGO, Chile, May 06, 2010 (BUSINESS WIRE) — LAN Airlines S.A. and its subsidiaries (“LAN” or “the Company”) (NYSE: LFL / IPSA: LAN), one of the leading airlines in Latin America, today announced an agreement with Colombian airline Aeroasis S.A. (“Aeroasis”) to provide it with technical support and service consultancy in the process of obtaining an operating permit from the Colombian civil aviation authority (Unidad Administrativa Especial de Aeronautica Civil), within the established deadlines. This process includes the hiring of personnel and elaboration of technical materials, as well as the selection and acquisition of equipment, all according to the applicable legal and regulatory frameworks.

LAN’s firm interest is that once Aeroasis obtains its operating permit, the Colombian airline may become part of the LAN group of airline operators, through association and integration agreements, which shall, as applicable, be submitted for review to the corresponding authorities.

Aeroasis was incorporated in 2006 in the Republic of Colombia for the purpose of providing air transport for passengers, cargo and mail. Aeroasis is part of the CORSO y Cia. S.C. group.

About LAN

LAN Airlines is one of the leading passenger and cargo airlines in Latin America. The Company and its affiliates serve over 65 destinations around the world through an extensive network that offers full connectivity within Latin America, while also linking the region with North America, Europe and the South Pacific, as well as 63 additional international destinations through its various alliances. LAN Airlines and its affiliates have a leading position in their respective domestic markets of Chile and Peru as well as an important presence in the Argentinean domestic market and has begun operations in the domestic market of Ecuador.

Currently, LAN Airlines and its affiliates operate one of the most modern fleets in the world, with 86 passenger aircraft, and its cargo subsidiary, LAN CARGO and its respective cargo affiliates, have a fleet of 11 dedicated freighters. The Company recently completed its short haul fleet renovation process by acquiring new aircraft from the Airbus A320 family, enabling LAN to improve its efficiency and to reduce significantly its CO2 emissions. The fleet renovation is part of the Company’s commitment to the protection of the environment.

LAN is one of the few Investment Grade airlines in the world (BBB). The Company’s world class quality standards enabled its membership in oneworld(TM), the global alliance that encompasses the best airlines in the world. For more information please visit www.lan.com or www.oneworldalliance.com.

By Business Wire

SOUTHLAKE, Texas, May 04, 2010 (BUSINESS WIRE) — British Airways has selected Sabre Airline Solutions’ Qik Developer Tool to help the airline improve customer service and increase productivity for its ramp and airport agents.

The Sabre Qik Solution, which is part of the SabreSonic Customer Sales and Service (CSS) solution, allows airlines to create flexible graphical user interfaces that improve both the user and customer experience. It works in concert with British Airways’ systems to provide airport employees in-depth information about their passengers, allowing for a personal customer service experience. This solution can be used to augment any reservations system, airport and ramp systems, not just the SabreSonic CSS reservation solution.

“Sabre’s Qik Solution met important needs as we move our current customer systems forward and is an integral part of our Service Orientated Architecture and multi-channel strategy,” said Mike Croucher, head of Software Engineering at British Airways. “What we like best about Sabre’s Qik Solution is that it’s a truly innovative tool that is completely configurable and simple to use — we can customize how agents work by delivering the information they need most at the right time to best serve our customers.”

Sabre Qik Solution is unique in providing airlines the ability to quickly develop workflow processes, which are complex and cumbersome. Sabre Qik Solution is used by airlines worldwide including Lufthansa, South African Airways, Air New Zealand, Southwest Airlines and Thai Airways to fully automate and streamline business operations and improve accuracy for reservations and airport agents.

“We excel at delivering this kind of technology, which allows airlines to easily customize our solution to their operation,” said Jim Barlow, senior vice president of Passenger Solutions for Sabre Airline Solutions. “Sabre Qik Solution is one of many solutions we have developed to help airlines increase productivity, reduce costs and increase revenues. We are pleased that we can drive significant incremental value above what the airline uses today. It’s such flexible technology that it will adapt to any reservations system to create a custom point of sale and service for airlines.”

About Sabre Airline Solutions: The world’s leading provider of integrated solutions and services for airlines and airports, Sabre Airline Solutions helps companies generate more revenue by optimizing performance in 14 key areas of airline operations. More than 300 leading carriers and over 100 airports use Sabre Airline Solutions to better market their schedules, sell their products, serve their customers and operate efficiently. Sabre Airline Solutions was founded in 1960. For more information on Sabre Airline Solutions, please visit www.sabreairlinesolutions.com

By BUSINESS WIRE

May 4 (Bloomberg) — The future chief executive officer of the world’s biggest airline once surprised his old boss on a Houston highway by pulling alongside in his Infiniti as they were each doing about 130 miles per hour.

“The passenger window goes down, and there’s Jeff, a big grin on his face,” former Continental Airlines Inc. CEO Gordon Bethune, 68, said in recalling the late-1990s episode involving Jeff Smisek, then the carrier’s general counsel. “He waves at me and takes off. Who else would do that?”

Smisek “likes a challenge” and taking risks, Bethune said, whether it’s racing on a darkened highway or running Continental and UAL Corp.’s United Airlines after they merge. Smisek, a 55-year-old Harvard Law School graduate, has been leading Houston-based Continental only since January.

“We fully expect that Smisek and his chosen team will be successful in combining the best of each organization,” said Douglas Runte, managing director of Piper Jaffray & Co. in New York. “But the immensity of the challenges should not be underestimated. U.S. aviation history is littered with the debris of airline mergers.”

Smisek will have to engineer profits at the combined carrier after annual losses at UAL and Continental in each of the past two years; navigate a U.S. antitrust review for the airline that will be the largest in the industry by traffic; and work with unions that have demanded the ouster of United CEO Glenn Tilton, who is staying on as nonexecutive chairman.

Read more

BAGHDAD

Lawyers working for Kuwait attempted to confiscate the first Iraqi Airways plane to land in London in 20 years over a dispute dating back to Saddam Hussein’s 1990 invasion of the oil-rich Gulf state, the Iraqi Ministry of Transportation said Thursday.

Kuwait is demanding reparations of $1.2 billion from Iraqi Airways for the alleged theft of 10 airplanes and millions of dollars worth of spare parts during the invasion and seven-month occupation.

Iraq says it has repeatedly called for talks over the case and to solve it in a “friendly way,” but the Kuwaitis have not responded.

According to the statement, the lawyers attempted to confiscate the airplane that made the flight, but were not able to when it turned out to be chartered from a Swedish company and not owned by Iraqi Airways.

Christopher Gooding, a lawyer representing Kuwait Airways in the dispute, said in an e-mail to The Associated Press the carrier served a court order on Iraqi Airways related to past English court rulings requiring it to pay $1.2 billion to Kuwait.

He said the order served this week calls for the freezing of Iraqi Airways’ worldwide assets, and requires the carrier’s director general to provide a statement of those assets and remain within the court’s jurisdiction in order to make the affidavit.

Gooding said Iraqi Airways has done “absolutely nothing” in response to the court order.

“The latest statement by the Iraqi Ministry of Transport lacks one simple statement — that (it) intends to meet its obligations,” he said.

The Iraqi ministry said the director general of Iraqi Airways, Kifah Jabar Hassan, who was on the flight, had his passport confiscated and is forced to remain in Britain now pending legal developments.

“Basically Iraqi Airways have to turn up with an affidavit of their assets worldwide. Then we’ll wish him godspeed and he’ll be on his way,” Gooding said, referring to Hassan.

The case is still being played out in Britain and has been described as the longest running commercial case in the history of British courts.

Kuwait has repeatedly attempted to seize airplanes purchased by Iraq as compensation, most recently in 2008, when it secured a court order to take 10 planes ordered by Iraqi Airways from Canada’s Bombardier. The case is on appeal.

“The ministry is surprised by the escalating and provocative behavior taken by the Kuwaiti authorities, insisting on harassing and embarrassing Iraqis wherever they attempt to open a window to the outside world,” the Iraqi statement said.

By HAMID AHMED, The Associated Press

(CNN) — You’ve heard passengers’ horror stories about sitting for hours in a parked metal tube with crying babies, clogged toilets and rationed snacks.

The Department of Transportation hopes they will become faded memories for air travelers after new, more aggressive passenger protection rules go into effect Thursday.

The DOT’s tarmac delay rule subjects airlines to stiff fines if passengers are stuck on the tarmac for more than three hours. It was prompted by a string of long delays dating back to December 2006, which DOT documents say caused passengers “undue discomfort and inconvenience.”

The tipping point for DOT Secretary Ray LaHood came in August 2009, when 47 airline passengers were trapped overnight on a tarmac in Rochester, Minnesota.

Passengers reported subsisting on rationed Pringles potato chips and said the toilet stopped working.

“There was no common sense used, no decency towards people that were sitting on a plane,” LaHood said Tuesday at a news conference.

The tarmac delay rule has been widely discussed and debated since it was announced in December, but it is only one of a series of new DOT regulations designed to protect commercial airline passengers.

Here are a few more details travelers should know:

Expect a response to complaints to airlines

The DOT requires airlines to acknowledge a customer complaint within 30 days and provide a response within 60 days that addresses the specifics of that complaint.

Airlines must provide passengers with an e-mail address or online contact form, as well as a mailing address for filing complaints. The contact information must be available on carrier websites and e-ticket confirmations. Airlines don’t have to listen to your complaints over the telephone.

International travelers may have to wait longer

The three-hour tarmac time limit applies only to domestic flights. On delayed international flights, the DOT will allow U.S. carriers to determine their own time limits. The airlines must define those limits and include them in tarmac delay contingency plans posted on their websites.The agency says that less frequent international service would mean more inconvenience to consumers should those flights be cancelled.

Airlines’ tarmac delay contingency plans for all flights must assure passengers working restrooms and “adequate food and potable water” within two hours of leaving the gate or touching down. The DOT said snacks such as pretzels and granola bars would be considered adequate. The airlines are also required to provide medical attention, if needed.

Safety, security, air traffic exceptions may apply

Exceptions to the tarmac delay limits may apply if the pilot sees a safety or security issue with returning passengers to the terminal. The DOT cites weather, air traffic control or a government agency directive as possible issues.

Air traffic control may also override the rule if it determines that getting passengers off the plane would create a major disruption in airport operations.

Unrealistic scheduling and chronic delays prohibited

Large airlines can be penalized for unrealistic scheduling, which may include a frequently canceled flight or one that is considered “chronically delayed.” The designation applies to flights that operate at least 10 times a month and arrive more than 30 minutes late more than half the time.

Carriers with flights that are chronically delayed for more than four consecutive 30-day periods would be subject to penalties.

Beginning at the end of July, large airlines will have to provide flight delay information on their websites for all domestic flights early in the purchasing process.

“We were concerned that if we simply permitted carriers to display flight delay information at any stage before a consumer buys a ticket, it could result in passengers not having access to that information until just before they click the ‘buy now’ button,” the DOT document explains.

Customer service and compliance required

The DOT also requires airlines to develop customer service plans to address situations not covered in their contracts with passengers. Airlines are expected to audit their compliance and report the results to the DOT.

How rules are enforced, penalties determined

Civil penalties of up to $27,500 per passenger would be paid to the government, not to passengers. That amount is the maximum civil penalty for large airlines for violating any aviation consumer rule.

DOT spokesman Bill Mosley told CNN in an e-mail that the department monitors airline compliance by reviewing consumer complaints and calls to the airline, and by making onsite visits.

“The Department’s Aviation Enforcement Office considers a number of factors in determining the civil penalty it would seek,” he said. Among those factors are the harm caused by the violations, the alleged violator’s compliance record, economic conditions, ability to pay, how long the violations continued and the strength of the case.

For more information, search for docket dot-ost-2007-0022 on www.regulations.gov.

By Marnie Hunter, CNN

Carry-on luggage should be considered an “essential” item for airline travel. That’s from New York Senator Chuck Schumer, who pressed ahead with his stand on the issue yesterday by traveling around to airports in New York state to drum up publicity for his efforts.

“Carry-on bags are essential,” the Times-Union of Albany quotes Schumer as saying at a Monday press conference at Albany International Airport. “There’s a worry, if you check your bag, it won’t show up at your destination.” For its part, Spirit notes carry-on items that could fit under the seat in front of you are not subject to the fee.

Schumer also made an appearance at Syracuse’s Hancock International Airport, where he hammered away at the same theme. “If people are going to spend their hard earned dollars to fly, they ought to get descent service in return that is reasonably priced without any hidden charges,” Schumer is quoted as saying by The Post-Standard of Syracuse. “Charging for carry-on bags is a step over the line,” Schumer adds.

Schumer has emerged as one of the first and most-outspoken critics of Spirit’s plan to charge for carry-on bags after the airline announced earlier this month that it planned to do so. Designating bags as “essential” would close a loophole that prevents the government from taxing a carry-on fee. Schumer argues that a tax on the fee would be a disincentive for airlines to add such charges.

Schumer has even pressured other airlines for commitments not to charge for carry-ons. Five airlines – American, Delta, JetBlue, United and US Airways – made pledges not to do so. He’s pressing other carriers to join that bunch. The Times-Union writes “Schumer is asking 21 other domestic carriers, many of them regional airlines that operate under the banner of the majors, to make the same commitment.”

However, no matter how unpopular Spirit’s carry-on fee may seem, Schumer’s efforts aren’t drawing support from everyone. Several newspaper editorials have criticized Schumer’s efforts.

One such editorial comes from the New Hampshire’s Foster’s Daily Democrat, which writes “it’s none of Congress’ business.” The Jamestown Sun of North Dakota opines: “The free market is entirely capable of handling that job on its own.”

By USA Today.

BRUSSELS – The European Union on Tuesday warned governments against lavishing emergency aid on airlines to make up for losses from disruptions in operations caused by the eruption of a volcano in Iceland. But it proposed other measures to help them recover from the weeklong shutdown of air travel.

The European Commission’s own estimate of losses ranged from €1.5 billion to €2.5 billion, or $2 billion to $3.3 billion, taking into account losses by airlines, airports and tour operators, said Siim Kallas, the E.U. transport commissioner.

The International Air Transport Association last week estimated lost revenue for airlines from the stoppage to be $1.7 billion – but that was before adding in the cost of hotels and meals that airlines have paid for stranded passengers.

Air traffic levels in Europe have been back to normal since Thursday, according to Eurocontrol, the agency responsible for coordinating European air traffic management. According to the agency, more than 100,000 flights were canceled from April 15 to April 22.

Seeking ways to help airlines without giving one carrier an advantage over others, Mr. Kallas said that airlines should be allowed to expand their use of night flights to ensure that stranded passengers were returned home and backlogs of freight could be delivered.

He also proposed temporarily easing the rules governing the way takeoff and landing slots were allocated at airports.

The European authorities offered the same relief after the terrorist attacks of Sept. 11, 2001, in the United States, when flights were similarly disrupted. The North Atlantic routes especially are hugely important to the profitability of many of Europe’s leading carriers.

Other measures to help airlines with short-term cash-flow problems could include temporarily deferring the so-called en-route charges normally paid by airlines to air traffic control, he said.

But Mr. Kallas also warned E.U. governments against doling out excessive amounts of emergency aid to air carriers that already were flailing financially before the crisis. “Any support must respect a level playing field,” he said. Financing “must be granted on basis of uniform criteria,” he added, noting that the competition authorities in Brussels would scrutinize such aid.

The chief of the I.A.T.A., Giovanni Bisignani, has suggested that E.U. governments are directly responsible for the financial losses because they demanded unnecessary airspace closure.

Ordinarily in Europe, airport slots are subject to a rigid application of a use-it-or-lose-it rule. That rule states that if carriers use a takeoff or landing slot less than 80 percent of the time, they must forfeit the slot. Airport slot coordinators calculate slot use on a six-month basis, which means the lost week caused by the ash crisis represented about 4 percent of normal semiannual use. Airlines have been worried that without any modification to the formula, this would count against them in the way slots are allocated in the second half of this year, said Anthony Concil, an I.A.T.A. spokesman.

In the United States, most airports set their own slot allocation rules, according to the I.A.T.A. Only three – La Guardia and John F. Kennedy airports in New York and O’Hare in Chicago – apply a use-it-or-lose-it rule similar to Europe.

Mr. Concil noted that many airlines were already using their allocated slots less before the ash cloud shut down air traffic because the economic downturn and financial crisis had reduced demand for air travel. Before the ash-related shutdowns, European airlines were expected to lose $2.2 billion this year, after a $3.5 billion collective loss in 2009, according to the I.A.T.A.

The industry’s recovery in Europe has been slower than in other parts of the world, like Asia and Latin America, because the slow pace of economic recovery and still-weak consumer confidence.

The I.A.T.A. has also been lobbying hard for government reimbursement of expenses for accommodation and meals that airlines have incurred in compliance with the E.U.’s so-called passenger bill of rights. The rules oblige E.U. carriers – or any airline flying from the European Union – either to rebook the passenger and to foot the bill for hotel stays and meals, or to reimburse the passenger in full, in the event of cancellations.

“In the immediate situation, we’re looking for some relief from the costs incurred for customer care,” Mr. Concil said. “Within the parameters of authorized state aid, we are looking to governments to mitigate the aspects of this extraordinary week.”

But Mr. Kallas cautioned them against expecting too much. “There is not a sack of money waiting somewhere for this kind of crisis,” he said, adding that the proposals would be discussed at a meeting of E.U. transport ministers on May 4 in Brussels.

John Hanlon, a spokesman for the European Low Fares Airline Association, welcomed the commission’s acceptance of the industry’s case for compensation. But he expressed concern that the measures might allow governments to offer loans or loan guarantees to traditional carriers that were struggling even before the volcano erupted.

“We are totally for compensation, but it has to be specifically linked to verifiable costs incurred,” Mr. Hanlon said. “Loans and guarantees would appear to be the wrong mechanism for that.”

The association, whose membership includes Ryanair and easyJet, the leading budget airlines in Europe, has long challenged such support to flag carriers. Last month, it estimated that more than €1 billion worth of state subsidies had been granted in recent years to ailing airlines, including SAS of Sweden, Malev of Hungary, and CSA of the Czech Republic.

Budget carriers are not immune from such accusations, however. Air France recently appealed to the Union to investigate assistance that Ryanair had received from French regional airports.

By JAMES KANTER and NICOLA CLARK, The New York Times

JetBlue’s record first-quarter revenue wasn’t enough to keep its earnings out of the red, disappointing investors in an otherwise upbeat day for airline stocks.

On Wednesday JetBlue reported a first-quarter loss of $1 million, or 1 cent per share, compared with the gain of $12 million, or 5 cents per share, posted in last year’s corresponding period. Wall Street expected a quarterly profit of 3 cents per share.

“While we are disappointed to report a loss for the quarter, we are confident that we are taking the right steps to return to sustained profitability,” said Dave Barger, JetBlue’s chief executive. The first-quarter report was reminiscent of the high-cost issues the Forest Hills, N.Y.-based firm warned about at the beginning of the year.  Much of the shortfall came from higher fuel costs, and a $15 million one-time charge to switch to a new reservation system.

Sales meanwhile rose 9.7% to a first-quarter record of $870 million, from $793 million. Despite the gain, JetBlue’s top-line also fell short of expectations, as Wall Street anticipated revenue to the tune of $880.5 million. The company noted that severe winter storms in the Northeast cut sales by about $15 million.

There was still good in the report. Yield per passenger mile in the first quarter was 12.13 cents, up 3.8% compared with the first quarter of 2009. Passenger revenue per available seat mile for the first quarter 2010 increased 4.9% year over year to 9.32 cents, and operating revenue per available seat mile increased 3.4% year-over-year to 10.32 cents.

“We are encouraged by recent revenue trends as the economic environment appears to be improving and we derive additional revenue benefits from our new customer service system,” said JetBlue Chief Financial Officer Ed Barnes.

Shares of JetBlue fell 3.1%, or 20 cents, to $6.34, in early-morning trading. Since the beginning of the year the airline’s stock has made its way up 16%. JetBlue was the only name in the airline space to fall Wednesday morning, as US Airways Group  rose 5.2%, Delta Air Lines   lifted 2.5%, UAL jumped 4.3%, and AMR  increased 3%.

JetBlue’s report comes a day after UAL, the parent company of United Airlines, reported better than expected results from a mix of higher fares and increased travel.