777heavy
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AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:26 am

In today's newsletter of a.net had been a interesting article about the American airline industry and his future.

Citation from the article:
"Put it all together and experts contend a transformation is under way that will make the American airline industry leaner, more efficient, and far more consumer friendly in the future - at least those carriers that survive"

here is the Link:
http://www.tribnet.com/24hour/business/story/1373766p-8607488c.html

As aviation experts, what's your opinion? Are the efforts of the airlines to cope with the situation enough, are they well positioned or is every step/restructuring they take for nothing?

777hevy
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Scooter
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:35 am

Good god...not another one of these "who will be next?" threads. Everybody has been claiming that airlines would drop like flies after 9/11, but guess what? Two and a half years later, everybody is still chuggin' along.

AA, DL, and UA aren't going anywhere.

My name is Scott, and I am addicted to writing trip reports.
 
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STT757
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:42 am

Of the big six the airlines health are ranked like this, in terms of healthiest to least healthiest.

1.) CO
2.) NWA
3.) AA
4.) DL
5.) UAL
6.) US Airways

#'s 4,5, and 6 are in serious trouble

# 3 (AA) is doing well but buried under a ton ($22 Billion) of debt

CO and NWA would be break even if not small profit this year if gas prices did not sky rocket as they did.

None of the big six can make money with oil at $40.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
tommy767
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:43 am

I really do not think we will see an airline bankruptcy soon. It would be a long winding road for something such as that to happen. However, the majors still must try as hard as possible, as JetBlue, Airtran ETC. are just becoming stronger.

This I didn't get:

"American Airlines is gearing up for what are expected to be bitter labor negotiations that some analysts believe could make or break the airline."

Does anybody know what the author is refering to? I'm not doubting him, but I'm wondering what exactly is going on that can "Make or break" the airline.

Notice how the the author didn't say anything about CO or NW.
"KEEP CLIMBING" -- DELTA
 
StevenUhl777
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:45 am

Scooter: Well said! I also agree that DL, AA, and UA aren't going anywhere.

One thing that stuck out in my mind as I read the article was about the labor negotiations at American? Didn't they just sign a 5 or 6 year deal last year as part of their effort to avoid a Ch. 11 filing? I know very little about AA, but this seemed odd.

These three airlines mentioned in the thread are going to experience a hell of a lot of turbulence for a while to come, there's no doubt about that. I hope DL and AA can avoid Ch. 11...and that comes from a life-loyal UA man. I personally wish UAL would find a different avenue than pursuing government cheese, but that seems to be their goal. Even if they don't get, I would expect an investor group to step forward that is interested in keeping the carrier together, given the brand name and network. Even if DL files Ch. 11, I don't think it will just "disappear."

I believe at some point there will be some consolidation, but I see it more on the LCC side. Several of these carriers are going to experience growing pains in the next few years, especially B6 and F9. This "expert" at Univ. of Portland forgot to mention that critical fact.

US Airways is a big question mark, but everyone knows that. Still, summer is coming up, and that's the best season. Depending on how well the airlines do, plus the gas price issue, will determine a lot going into the fall/winter season.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
ual777contrail
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 4:47 am

Tommy,
everyone wants to be an airline critic, DL has an uphill battle more than any others with the stubbornness of their pilot group.

The only airline I could see being half the size, but still around is US. None of the airlines will be going anywhere anytime soon.


UAL 777 CONTRAIL
 
ConcordeBoy
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:04 am

Two and a half years later, everybody is still chuggin' along

Tell that to Vanguard, Midway, and National....  Big grin
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
caetravlr
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:11 am

None of them will survive, the roaches will inherit the earth. Oh wait, we meant in the shorter term?

The only airline that I think could even possibly be on the brink of liquidation would be US. Of the others questioned in this thread, I think they will be around for quite a while.
A woman drove me to drink and I didn't have the decency to thank her. - W.C. Fields
 
7e72004
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:18 am

AA--i think they will survive without any real cuts or drastic measures.

DL--I think they will survive, they may have to do some reassessing in some markets but all in all they will be ok.

UA--I think they will survive, whenever they get out of bankruptcy they will have to do some "rearranging."

The airline business is going thru a very difficult time and has been for some time now but i think we will see most of the airlines around. The only one i question is US. But i hope they pull through as well.
The next generation of aircraft is just around the corner!
 
freshlove1
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:22 am

None of them are going anywhere, and yes it is true even the LCC's will have their problems it can only be avoided for so long before it comes up. WN has a F/A contract that I do not believe has been worked out yet, and the pilot contract is due in a little and according to some of the WN pilots I talk to that do our charters they say it will be very interesting when negoation time comes around. As for F9 and B6 Their costs to will rise espically if B6 adds the 190 that they are talking about, and I believe F9 is adding some more Airbuses to the fleet. Unfortunatly this is part of this industry, things are good for awhile then things are bad for awhile it is just the way it is. No airline no matter who they are can avoid this, especially during these times.
 
4jaded
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:51 am

Only time will tell but I doubt that any of them will go easily. The only one I see that really has no hope at the moment is US. I think they have just taken tooo long to fix the problems and now the vultures have swooped in to pick at the corpse even before it dies.
 
Thrust
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:55 am

Don't be so positive DL is intact. I am not one to hope that DL will go down, but it seems quite likely DL will need a miracle to get out of their handicapped situation right now. The future of UA and DL is far more questionable than AA's. AA is the only profitable airline among these three, as well as the only one out of bankruptcy (DL is dangerously approaching Ch.11 ). And to narrow it down even more, the future of DL is more questionable than UA's, as UA is almost ready to emerge from bankruptcy. All in all, I expect AA and UA will remain, but DL to me seems the most prone to death right now in the United States.
Fly one thing; Fly it well
 
B4REAL
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 5:57 am

Is it 2005 when the current DL pilot agreement expires? I wonder if DL is trying to tough it out until then and really low-ball them or just outsource all pilot positions @ that time.
B4REAL, spelled like it sounds
 
Thrust
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 6:02 am

DL is going to need to cross their fingers to survive. This "pilot agreement" has cost the airline all of its remaining 777 orders  Angry
Fly one thing; Fly it well
 
bobnwa
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 6:02 am

Thrust,
"AA is the only profitable airline among these three"

Are you reading some financial reports the rest of us do not have access to? Please share these reports with us.
 
Thrust
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 6:15 am

Well, Bobnwa, AA is almost profitable. AA has reduced 84% of its losses in an article I read some time ago, a few weeks ago. They are predicted to regain profitability soon. They are certainly in good financial health compared to UA and DL. And they are expected to grow 100% profitable again. See previous a.net topics...look for "AA reduces 84% of its losses"
Fly one thing; Fly it well
 
Delta767300ER
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 2:27 pm

They all better survive.

-Delta767300ER
 
flashmeister
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 2:40 pm

Of everyone mentioned, AA has certainly done the most to right itself. They've really pulled a rabbit out of their hat considering how close to Chapter 11 they were.

The problem is that none of the legacy carriers -- not even Continental -- has made the big changes needed to keep from riding the profit/loss roller coaster every time oil prices rise and the economy falls. If you ran a business, wouldn't you want to be in a position to be profitable, or at least breakeven, regardless of what the economy does?

I'll never understand why folks think that the economics of aviation are somehow different. They're not. All of the legacy carriers are public corporations who are there to make a buck. Why they tolerate constant cyclical losses rather than changing their business practices to accomodate different circumstances is beyond me.
 
ZASpringboks
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RE: AA, DL And UA Who Will Survive?

Wed May 19, 2004 3:22 pm

Perhaps we need to be more sensitive about this topic. We should not forget about the nearly quarter of a million people who have careers in these airlines.

Take it easy with the comments by you non airline people out there. These are our families and our future that you are "ranking" and "betting" on. Not so much in this thread but in others.
 
InnocuousFox
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 12:54 am

"Perhaps we need to be more sensitive about this topic. We should not forget about the nearly quarter of a million people who have careers in these airlines.

Take it easy with the comments by you non airline people out there. These are our families and our future that you are "ranking" and "betting" on. Not so much in this thread but in others."

You may want to write a quick note to the hundreds of market analysts at places like Standard & Poor's. They must be hurting people's feelings left and right.

It's not about the feelings, it's about objective truth. No one wishes ill upon the employees or their families - but that doesn't make the problem go away, does it?
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
 
Thrust
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 12:58 am

Though I did make betting on which airline is most likely to survive, even one of these three great carriers missing puts a serious dent in my enjoyment of aviation. I hope DL resolves their issues and finds their way to the top again. I was so sad that DL decided to defer any new 777s.  Crying
Fly one thing; Fly it well
 
4jaded
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 1:05 am

Sugar Coating the truth and the reality that there is way too much "legacy" capacity out there to make a viable industry will not change the fact that these companies cannot loose money forever. No one wants to see a "brand Name" go away into the history books but the reality is that it's going to happen. The gravy train of U.S. Gov money flowing to the airlines is about to end. This has only delayed what most people know is going to be a wrenching change in U.S. aviation. I'm sure the Bush administration is doing everything they can behind the scenes to prevent this before the election but regardless it just has to happen. The survivors will be alot more viable going forward.
 
bucky707
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 3:02 am

"Is it 2005 when the current DL pilot agreement expires? I wonder if DL is trying to tough it out until then and really low-ball them or just outsource all pilot positions @ that time."

For the record, airline labor contracts in the US never expire. They do become amendable.
 
cjuniel
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 5:22 am

I definitely would not put Delta ahead of United in the "health" department. They have some major issues they need to resolve and soon. There is no way they can wait until that contract is amendable in 2005. The company will be in financial ruin by then.
 
american762
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 5:31 am

AA has the best chance of survival in this argument. They have done a lot to bring themselves back to security without sacrificing passenger amenity (WELL DONE).

Delta and United will both survive with some good cost-cutting efforts. US Airways is getting close to the "do something drastic time" line.

I wonder how long it will take good old "Workbench" to drop into this and tell us how pathetically AA will fail? I give it 1 day  Smile
Pan Am has a place of its' own. You call it the world, we call it home.
 
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RayChuang
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 5:48 am

I think AA will most likely survive. You have to remember that the state of Texas has enough influence in Congress on both Democrat and Republican sides to keep the airline going.  Smile

Besides, AA has a good, well-maintained fleet of airplanes. The Super 80 planes could get an engine retrofit and other upgrades (similar to what NW did to their DC-9 fleet) and AA will be able to fly them well past 2017!  Big thumbs up
 
FlyGuyClt
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 5:56 am

Until something is done to hike the fares, or we all make $8.00 per hour with no benefits or pensions, or fuel prices come down. ALL Airlines are at risk for long term survival.

Safe Flying  Smile
Florida Express, Braniff II and ......
 
pw4460
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 6:16 am

An airline has got to be the hardest business to run in this country, and maybe the world. An airline is at the mercy of everything from unions, to fuel prices, to accidents/incidents...not to mention competition from other airlines and the economy as a whole. Airlines go through hundreds of millions of dollars each year in just the cost of day-to-day operations...and in the end, only a handful turn a profit, and it's a small one at that. It's enough to make you question why ANYONE would want to put themselves through the agony of running a business like that.

Having said that, DL appears to be the weaker of the three, and you know what that means, UA and AA will be ready to pounce when DL's wounds get severe enough. Even worse, DL will slowly get the life blood sucked out of it by LCC's until there's nothing left but the int'l stuff. AA will survive on it's size alone...the bigger the giant the harder the fall...and that's a fall that the U.S. economy just can't allow to happen. As already stated, UA has had the chance to reorganize, and should be in a better position to compete. US seems to have a disease for which there's no cure for. If DL goes into Chpt. 11 now they can get out of this with their route structure, hubs, and finances intact...and I hope they do, because the idea of an all-AirTran hub at ATL is NOT appealing to me.

Now, you can call me crazy, but a DL-US merger might not be so out of the question...they would dominate the eastern U.S. which amounts to a great deal of pass. traffic...but I guess that idea is more of a "fantasy football" type of thing.

pw
 
FlyGuyClt
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 7:37 am

PW. DL and US in my opinion would be an awful idea. Example. PI and US. They competed against each other. There are too many over lapping routes and CLT and ATL are too close together. They both have shuttles too. The fleets also in no way match. Just my 2 cents or more.


Fly Safe  Smile
Florida Express, Braniff II and ......
 
InnocuousFox
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 7:46 am

Well, the Wall Street consensus on AMR right now is a "Strong Buy". From Standard & Poor's analysis updated 4/30:

Overview 30-APR-04

We see revenues growing 8% to 10% in 2004, aided by a 6% capacity increase, and fuller planes due to our expectations of an increase in industrywide demand. We see passenger traffic aided by an improving U.S. economy and some pent-up demand for travel, after three years of reduced demand, but airfares are likely to remain under pressure. AMR was successful in negotiating labor concessions in 2003, cutting annual employee costs by about $1.8 billion. We think this moves AMR a long way toward profitability. Fuel costs remain higher than historical averages, which we think is partly offsetting improved costs in other areas. We forecast a loss of $0.25 a share for 2004, a substantial improvement from the loss of $9.45 a share posted in 2003 (excluding special items). For 2005, we forecast $1.50 EPS, reflecting our expectations of an improved industry environment and additional cost controls. On a Standard & Poor's Core Earnings basis, we project a 2004 loss of $0.62 a share.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
 
skymileman
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 7:58 am

Those three carriers are so big that I doubt they would ever completely tank. That'd be a lot of jobs lost and a lot of service lost, so I think the government (Until a point) will continue what they have been doing and helping out.
 
StevenUhl777
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 8:03 am

I think AA will most likely survive. You have to remember that the state of Texas has enough influence in Congress on both Democrat and Republican sides to keep the airline going

You're absolutely right. And the same holds true for UAL, too...with Dennis Hastert as Speaker of the House, not to mention Henry Hyde, who represents Elk Grove Township. I believe Democratic governor Rod Blagejivc (sp?) is also a strong UAL supporter, as is Richard Daley. Face it...no politician wants to see a large airline with its chief hub in their city/district/state just vanish into the wind. They're gonna fight...regardless of party.
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
flymia
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 9:32 am

Here are the airlines to stay
AA,UA,DL,NW,CO,US. DL US and UA might need alot of cut backs.
If DL went down who replaces there hub and International market? B6 in JFK AA CO or NW in ATL. I dont see DL going down completly. Worse thing I think that can happen is losing the SLC hub.
"It was just four of us on the flight deck, trying to do our job" (Captain Al Haynes)
 
iowaman
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 9:35 am

I will be surprised if AA ever gets out of debt........isn't it something like one BILLION dollars interest every year?!?!  Confused
 
pw4460
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RE: AA, DL And UA Who Will Survive?

Thu May 20, 2004 9:47 am

DL's pilots are going to have to bite the bullet on this one. I don't see them surviving without the rollback in pay. It would probably help if they could get a management team that actually cared about the airline, which allegedly they've put together a new team just this week. And the furloughed pilots that they are scheduled to bring back are probably going to have to remain furloughed unless every pilot is willing to work for less pay...that is...every pilot is willing to keep the airline alive and ALL of their jobs saved. DL has a lot of senior pilots and the thought of being with a company for 20+ years and losing ground rather than gaining ground may be asking too much. But it could be worse, these pilots "could" be on the seniority list at US.

pw