aatripleseven
Posts: 296
Joined: Sun Jun 04, 2000 9:20 am

America West, USAirways Survival

Tue Jan 08, 2002 5:56 am

These are some excerpts from a press release:

CHICAGO, Jan 7 (Reuters) - Shares of America West Airlines and US Airways fell sharply on Monday after Barron's business magazine suggested major carriers may have suffered such serious damage from the weak economy and Sept. 11 attacks that they may not be around to benefit from an eventual recovery.

Barron's said in this week's edition a soft U.S. economy and the Sept. 11 attacks created serious stress fractures that will result in fewer U.S. carriers in two or three years, according to many airline executives and analysts interviewed.

America West received conditional approval of federal loan guarantees for $380 million late last year, but would remain in a precarious state even if plans are completed, Barron's said.

US Airways could also face the possibility of bankruptcy in 2002 if traffic doesn't return quickly enough, Barron's said.


If both America West and USAirways cease operations, these will leave gaping holes on both coasts. What do you think will happen to their respective markets? Southwest will definitely ramp up operations in PHX but do you think they will take some of HP's aircraft? What about US's PHL hub? Will United get something together and take advantage of it?
 
SFORAMPER
Posts: 109
Joined: Wed Mar 29, 2000 3:28 pm

RE: America West, USAirways Survival

Tue Jan 08, 2002 6:44 am

Typical media over reacting
 
Guest

RE: America West, USAirways Survival

Tue Jan 08, 2002 8:34 am

The loan guarantees will keep HP going well into the future.
 
flyCMH
Posts: 2134
Joined: Fri Jul 09, 1999 12:15 pm

RE: America West, USAirways Survival

Tue Jan 08, 2002 9:45 am

One must remember, this is speculation by Barron's. The press release even states that the magazine "suggests" that certain airlines might not be around to experience an economic upturn. The hype is just that...the media reading too deep into the article and saying that the collapse of USAirways and America West is now inevitable becuase of a source that is deemed highly credible has "suggested" it. While it is true, both airlines are the weakest of the major U.S. carriers, it does not mean that their fates are set in stone. One only needs to point to the revitalization success story known as Continental to see that changes for the better can happen. America West is under new management, management that will hopefully be able to steer the airline in the correct course to profitability, along with the help provided by the government loans. USAirways too is making an attempt to lower costs to stay in business. I remain hopefull that both airlines will be able to overcome the obstacles in front of them and remain fixtures in American commerical aviation.
 
ContinentalEWR
Posts: 3619
Joined: Wed May 24, 2000 2:50 am

RE: America West, USAirways Survival

Tue Jan 08, 2002 11:24 am

It is a possibility. After all, the last time the industry experienced a downturn of this magnitude (1990-91) during the Persian Gulf War which was accompanied by high fuel prices, Eastern and Pan Am, two of the weakest US airlines at the time disappeared and Continental filed for Chapter 11 the second time in less than a decade.

US Airways is more troubling than HP. It is not a true East-West carrier, despite significant routes from its hubs to the West. It has diminished its presence in Europe (PIT-CDG, PIT-FRA, and all CLT-Europe flights suspended) and has never addressed its high operating costs.

HP is a lousy airline, with a mediocre product but it operates in a region where demand for air travel will grow exponentially and HP can take advantage of the demise of United Shuttle by adding more flights and improving its profit margins.

The article, at least the portion printed on Bloomberg, indicated that UA was also vulnerable. United may very well be too big to fail but the reality is that it is burning through cash faster than even AA, is facing down yet another nasty labor action by machinists, and has a high pay structure, particularly for its pilots.

The prospects are dim. For the middle tier carriers, things may look slightly better, thanks to more adept management, particularly at NW, CO, and of course, venerable WN.

ContinentalEWR

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