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Thread ID: 4845 | Posts: 4 | Started: 2003-02-07
2003-02-07 19:14 | User Profile
[url=http://www.nationalpost.com/financialpost/story.html?id=%7B113F7E28-840A-432B-BCFE-86F90F40754F%7D]Carriers have lost over US$7B[/url]
Peter Morton
Financial Post
Friday, February 07, 2003
WASHINGTON - Air Canada is not alone in its struggle to deal with a poor economy in a post September 11 world where luring both business and pleasure passengers has become a daunting task.
Collectively last year, the United States's 30-plus airlines lost more than US$7-billion despite a US$15-billion bailout from Congress after the terrorist attacks.
Two major airlines -- UAL Corp.'s United Airlines and US Airways Group Inc. -- are operating under Chapter 11 bankruptcy protection and many analysts think AMR Corp.'s American Airlines may not be far behind.
United shocked analysts when it posted a US$1.5-billion loss for its most recent quarter -- US$3.2-billion for the year -- while US Airways of Arlington, Va. had a US$794-million loss during its last quarter, down sharply from a US$1.2-billion loss in its previous quarter due to US$2-billion in cost cutting.
"Our disappointing results reflect an industry that continues to operate in uncertain economic times with weak passenger demand, escalating fuel prices and the threat of war," said David Siegel, US Airways president and chief executive officer.
Dallas-based American lost a record US$3.5-billion last year and is burning through about US$5-million a day. It's a situation that Don Carty, its chief executive, says is "unsustainable."
Ray Neidl, an airline analyst with Blaylock & Partners in New York says American must find at least US$2-billion in savings this year, representing 25% of its costs, or else it "could be in bankruptcy by next winter or sooner."
Delta Air Line Inc., the country's third-largest airline, is taking steps to head off trouble by cutting labour costs. While most of its work force is non-union, giving it far more flexibility than other airlines, it still has to contend with its 9,000 unionized pilots, looking for a 4.5% raise in May.
"We're hanging out there with a hugely expensive pilot contract," said Leo Mullin, Delta's chief executive.
But not all the U.S. aviation industry is in trouble. Some of the country's prominent low cost carriers are in the black.
Southwest Airlines Inc., JetBlue Airways Corp. and AirTran Holdings Inc. have all posted profits thanks to low costs, low fares and what analysts see as niche business models.
The low-cost model is so successful that both United and Delta are planning their own low-fair airlines. Delta plans to call its Song while United has yet to give its proposed new airline a name.
é Copyright 2003 National Post
2003-02-07 20:26 | User Profile
I think Southwest's success can be attributed to their honesty.
I mean they pack you in like a sardine, feed you next to nothing and let you suck an ice cube for refreshment (pass it down the aisle when you're done, please), but at least you know that going in and Southwest doesn't pretend any different. With the others, same deal, but they act like they're doing you a favor even having a meal, much less charging you ten bucks for a chicken dinner that was fresh about the time the Light Brigade roamed the Crimean Peninsula.
Yet, Sharon, who ignored Bush when the president publicly called on him to pull his army out of West Bank cities, is demanding that U.S. taxpayers fork over $4 billion in new military aid and agree to pay off $10 billion Israel intends to borrow should Israel decide to default.
Shouldn't that read, "When Israel decides to default?"
2003-02-07 20:55 | User Profile
Originally posted by Current93@Feb 7 2003, 14:26 **[url=http://amconmag.com/01_13_03/buchanan7.html]Ariel Sharonââ¬â¢s Shakedown[/url] by Pat Buchanan **
I can't think of a better follow-up reply, C93. Great post and excellent timing.
2003-02-09 18:36 | User Profile
Typically poor American thinking has consumers believing that the major airlines, who do offer more in terms of convenience, should be offering their greater service at Southwest prices. Southwest offers lower fares by using secondary airports which are less convenient to business travalers and by only offering another Southwest flight or a refund when they cancel a flight (major carriers will put you on another airline). Their service while usually much friendlier, is less convenient. Most Americans like the lower cost despite the lower level of service.