HPA320
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Will A Major US Carrier Disappear?

Sun Aug 01, 2004 11:44 pm

It has being brought to my attention that it seems there are way too many seats for passengers these days.

This means, there are also a lot of carriers within the US.

Therefore, it seems there'll be a reaccomodation of this seats. What do I mean? Well, that at least one major carrier will have to go  Sad

This will mean that the carriers that are left will be able to exploit the market in a better way.

What do you think about this?
America West Airlines. 1983-2005. The Journey Continues...
 
aa777flyer
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RE: Will A Major US Carrier Disappear?

Sun Aug 01, 2004 11:51 pm

Will A Major Carrier Disappear. More like will a Major Survive. DL's CEO told his employees likey only ONE or MAYBE TWO will survive this turmoil in the industry. US is on borrowed time, UA still has a LOT of work to do, AA still struggling, DL needs to get its cost down FAST, CO holding its own right now same as NW.
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HPA320
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RE: Will A Major US Carrier Disappear?

Sun Aug 01, 2004 11:54 pm

I think HP is doing the right thing  Smile
America West Airlines. 1983-2005. The Journey Continues...
 
SCRAMJET
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:00 am

A "Major" carrier might not disappear, but it might turn into a small trunk airline to feed the larger one(s) that survive(s).
 
Cory6188
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:03 am

Unfortunately, it seems as if any of the majors were to survive, it would only be NW and CO, who are the only two carriers that are somewhat financially stable at the moment.
 
InnocuousFox
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:11 am

Remember that "disappear" may mean in name only. TWA "disappeared" in name but their aircraft and schedule survived to some extent. That may be something that happens in a situation such as US Air(friggin-ways). They aren't just going to vanish but be reduced or swallowed through buy-outs.
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CXA330300
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:15 am

CO and NW will very likely survive. AA and DL maybe, US and UA, little hope.

And the other majors (WN, HP, ATA, Alaska) will definitely survive.
AC/AA/UA/DL/B6/WN/US*/CO*/FI/BA/IB/AF/SK/LX/Sabena*/TK/LY/SA/MN/SW/AM/CE*/CX/CA/MU/JL/SQ/TG/MH/KA/5J
 
luv2fly
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:17 am

Or they will no longer fly the schedule or cities they now do, being a dramatically different airline then they are now.
You can cut the irony with a knife
 
flashmeister
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:19 am

ATA will not 'definitely' survive. They're in major financial trouble, unable to raise more cash, and having enough cash on hand to last another quarter. Some Wall Street analysts are beginning to predict that they'll breach their ATSB covenants in September. ATA will not survive this one, I'm afraid.
 
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N328KF
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:19 am

I think Cory6188 is being overly pessimistic, and going with what appears evident "at the moment."

Only two major carriers left? I highly suspect otherwise. The airline situation in the U.S. would become a major problem for lack of competition if that occurred.

What I suspect might happen is that you'd see three or four, at least one for each of the large global alliances.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
prosa
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:27 am

I don't think that any will disappear. US and UA are quite troubled now, as are DL and AA to a lesser extent, but my prediction is that all of them will stumble through, albeit somewhat smaller than they are now.
"Let me think about it" = the coward's way of saying "no"
 
Cory6188
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 12:29 am

Another scenario might be that all US domestic travel except for a few transcons (NYC-LAX/SFO) becomes LCC-only, with B6, FL, F9, I-Air, Song, Ted, etc. while the Big Six fly only the profitable international routes.
 
freshlove1
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:09 am

US and UA are quite troubled now, as are DL and AA to a lesser extent.


Where are you getting your facts from??? US just posted a profit and I believe so did AA. UA is still under protection but they will come out soon. DL is another story, they seem to be having major problems now, more then US and AA and with out some major reorganization they will definatly see Chapt 11 unfortunatly. I seriously doubt any MAJOR carrier will die, they may downsize but I doubt they will go away. Unfortunatly it is just a matter of time until every airline goes through something like this, they can only avoid it for so long beofre they need to change their business plan to stay competitive.
 
RCS763AV
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:13 am

Im sorry....isnt AA already profitable.....
 
tommy767
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:18 am

HP, AA, CO and NW are in the best shape of all of them right now.
"KEEP CLIMBING" -- DELTA
 
uswyjer
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:24 am

US pulled small profit in the second quarter, their pilots have agreed to pay cuts and extra flight hours, and their flight attendants have agreed to talks. While just yesterday Delta asked for $1Bil in cuts from their pilots. United is still in bankruptcy but they've been quiet lately. AAs been quiet lately as well. NW and CO are okay from what I've heard, mostly from around here though Big grin
-Jeremy
 
northwestair
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:32 am

I thought the US profit was because they sold some assets
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freshlove1
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:37 am

They sold a few planes that they were no longer using but even if they didn't do that they would have still posted a profit, it just wouldn't have been as big
 
sebring
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:41 am

You can focus on majors all you want, but the US industry is not likely to find stability even if a major disappears, or if two or more majors merge. So long as Boeing and Airbus keep pumping out massive numbers of new jetliners, there will always be plenty of well priced new and used aircraft around to start up even lower cost LCCs. A liquidation of a major would result in hundreds of aircraft being thrown onto the used market. It would open up slots and gates at a major for potential new entrants. History will simply repeat itself
 
burnsie28
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 2:02 am

I dont think you will see any Legacy dissapear, but if you did it would be either UA or DL. Both did not have a great 2nd quarter, especially Delta, and NW has the most cash on hand of any airline, CO is doing good, US posted a profit, however, that was to be expected since they have dropped pay so much and now get nothing for retirement.
 
burnsie28
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 2:06 am

Although its not a major, Independence lost $27 million in I believe one month or so, ever since they became separate from UA and such. Hmm, what could be in store for independence?
 
Cody
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 2:28 am

This is an easy question to answer. In the simplest terms........every single airline out there right now will eventually go away. Yes, even WN. I also predict that at some point in time, IBM, AT&T and General Electric will go away. The question is when.

Looking near term (next five years) I predict one legacy airline will go away and the current LCC's will also see a death or two. It's a little premature to say it's going to be US AIRWAYS. If they get their cost structure in line already, they will be a force to reckon with. If they don't, they will go away. Some other upstart outfit will pick up the pieces. Then all of the sudden WN will have competition that can undercut them. So will JetBlue. They will have to adjust or die. Finally after everyone is working for free, airlines will no longer be needed because the future world economic structure will not sustain them and we will go back to a hunting and gathering society.

We usually lose an airline every ten years and are about due to lose another one. Everyone keeps saying "Oh there is going to be a big shakeout in the airline industry soon and someone's going to fail." They're right! Define "soon" though. I have been hearing this since before 9-11 and low and behold everyone is still here except Midway.
 
stirling
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 3:15 am

The loss posted by Independence is somewhat misleading. That figure includes costs associated with the startup....expenses that are only incurred once. They still lost money, but not as much as it would seem.

I have said this before here, the day is on the horizon where airlines as we know it will cease to exist....Most travel will be through one of the worlds alliances. With that said....expect US and UA to revisit merger talks...as well as something to happen with CO, NW, and DL.
We saw this when the commuters and regionals began flying in the colors of their partners. So what I predict is nothing more than a natural evolution.
The LCCs will remain, bigger, and fewer....
The truth remains, barring some catastrophic economic disaster, the US is, and will continue to be the worlds largest market for civil aviation....with the EU and China hot on her heels.
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MMEPHX
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 3:32 am

somewhere along the way if passengers and/or revenue don't return in numbers sufficient enough to allow economic operation of the airline system, one or even more of the majors will probably disappear. It is widely recognized there is excess capacity in the industry in terms of available seats something has to give somewhere. Either we all start paying higher fares or some capacity is taken out of the market. The LCC's are unlikely to take it out of the market as they are profitable within it now.

One possible answer is to relax the rules on foreign ownership if a US carrier was able to truly merge with a European or Asian carrier then economies of scale within the supply chain might just work. Current Alliances can only go so far and were in fact originally established because outright ownership wasn't possible.
 
artsyman
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 4:10 am

It has being brought to my attention that it seems there are way too many seats for passengers these days.
*****

Then how do you explain that virtually all the majors have daily systemwide load factors around 90% these days.

Other times of the year you may have a case, but not at the moment
 
InnocuousFox
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 4:54 am

"Where are you getting your facts from??? US just posted a profit and I believe so did AA."

Which facts did you decide to ignore? US posted a profit for THIS quarter but warned that they are expecting losses to continue.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
 
freshlove1
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 7:03 am

Which facts did you decide to ignore? US posted a profit for THIS quarter but warned that they are expecting losses to continue.


I'm not ignoring any facts so your wrong there. What else would you expect US to say when they are trying to get their employees to take more pay cuts? I would almost bet any amount that the creative accounting at US will show them having a loss next quarter so they can stress even more to the employees that the cuts are needed in order to survive.
 
clipper707
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 9:16 am

This is what will happen: NW will take CO and DL.
WN will take AA and UA.
F9 will take US,HP, and NK.

PA and PI will be reborn as the FLAG CARRIER.
TWA will return as a non sched.


Just my thoughts!
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NLINK
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 9:43 am

It would help the industry to get rid of capicty with a major going under.
 
baw716
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 10:01 am

To all,
Please have a look at my post under "United Fleecing". It explains in some detail about UAs dilemma, which is not so radically different than all the other Legacy or big carriers. It may (or may not) offer you some points to consider, then you can draw your own conclusion as to if any of the majors will survive.

BTW, I have not been following ATA, but my brother in law is one of their 757 check airmen. What's up (or down) in Indy?

Thanks!
baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
NWADC9
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 10:21 am

"Will A Major US Carrier Disappear?"

Yes, US Airways will disappear. Laugh out loud
Flying an aeroplane with only a single propeller to keep you in the air. Can you imagine that? -Capt. Picard
 
crjdispatchkid
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:18 pm

I believe ATA is not part of any alliances, so that kind of hurts to be alone out there. Also, look at NW / 9E pushing in on IND. First Midwest Express in MKE, now ATA in IND. I in no way offer any valued opinion, but am just making some observations.
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burnsie28
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 1:24 pm

While I agree, that in the rare chance that mega mergers happened that NW is more likely to take CO and DL rather then say CO taking NW and DL and so on, I disagree with WN taking AA and UA, for one WN would have VERY VERY VERY big problems with surviving if they got away from their business idea, then again, now that they have the highest paid FA's in the industry it will be interesting to see what kind of effect that will have on them. Also F9 taking US, HP, and NK is very funny, for one HP would be more likely to take F9, US is no where near F9 business wise, and NK, well, I believe they just bought their own fate. But thats just my $0.02
 
spacecadet
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 5:12 pm

I'm not ignoring any facts so your wrong there. What else would you expect US to say when they are trying to get their employees to take more pay cuts?

And why would they need to get their employees to take more pay cuts?

I think you're missing the forest for the trees here. CEO's don't say things like that unless they absolutely have to, because remember, this is a publicly traded company. Telling your investors that you expect significant losses to continue is not a recipe for a success in the market.

In fact, USAir's stock price right now is 2.88, down from a 52 week high of 32. That's a 93% or so drop. Obviously investors are not betting on this company sticking around.

If USAir is telling their employees they need more pay cuts, it's because they need more pay cuts. Not because they enjoy tormenting their employees. They're telling their employees that their financial position is so precarious that they have to give money back to the company in order to keep their job. They're telling investors the same thing. This is a last resort, not a first resort, because the last thing you want is a whole company full of people who don't want to work there. And nobody who wants to replace them when they quit to work for a better-run airline.

I've lived through my share of major airline shutdowns/buyouts... Eastern, Pan Am, TWA, nobody expected these airlines to disappear, but they did, and so have a lot of others. Given the current state of things, I don't see how at least one current major doesn't also join the ranks of the defunct. UA, US and DL seem to have the biggest problems right now - any one or even all three could be gone within five years barring another government intervention (not something I'd support - I didn't support the last one either).
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rwylie77
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RE: Will A Major US Carrier Disappear?

Mon Aug 02, 2004 9:16 pm

If you look at all markets around the world, companies operate much more efficiently where there is competition - just look at Emirates. The best thing the US government can do to their domestic aviation industry is open it up to competition and foreign ownership etc etc. Let BA and AA merge for example - it will happen and soon in my opinion and eventually we will be flying on Star Alliance and One World airways on A380's across the Atlantic for $50 each and the airlines will still make a profit.
 
Boeing7E7
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 8:10 am

I think it would be a safe bet that US Airways would move from the "Major" category to a "National" carrier if they keep making cuts. The stage is set for profits to start next year. I.E... DL would have come pretty close to making a profit if the pilots took a 34% pay cut. Loads are up huge this year. Time to start adding flights again.
 
reltney
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 8:28 am

Imagine if all or most of the airlines merge..........

We could make all the pay the same so you wont hear "they make more than us and she make more than me". One airline pay scale.......

Tax everyone heavily and have only one political party......


WE CAN CALL IT AEROFLOT.....
I am a pilot, therefore I envy no one...
 
luv2fly
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 8:43 am

Reltney

We need more like you around here.

That said if one does not go out, the ones that remain are slowly changing and that change will keep up more for some than others. I think IMHO - is that one will leave the landscape just not sure who and when, though I feel it is bound to happen and happen by years end 2005
You can cut the irony with a knife
 
NWAFA
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 8:46 am

With the totally crazy announcement today from UNITED with their 757's transcons, they are one step closer to being the one if not the 2nd to go away. If I was an employee there I would be demanding this management to step down.
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JMV
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 9:05 am

NWAFA,

If UA can make money on fares that are competitive they may find this is a draw over LCCs or other competition. If a business traveler is going to pay walk up fares for a cross country flight, yet get more comfort or services for the dollar, why not fly UA?

Frankly, I think once the legacy carriers have reduced their costs enough to compete with LCCs on a price basis while making a profit on each ticket you will see more of what UA is doing - differentiating themselves by the services they provide.
Google begins where my brain ends! ©
 
A330323X
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 9:12 am

I think it would be a safe bet that US Airways would move from the "Major" category to a "National" carrier if they keep making cuts.

I think it would be a safe bet that you're out of your mind.

Those would be some pretty freaking big cuts.

A major has over $1 billion in revenues. A national has between $100 million and $1 billion in revenues.

US Airways has about $7 billion in revenues.
I'm the expert on here on two things, neither of which I care about much anymore.
 
Boeing7E7
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 9:30 am

Those would be some pretty freaking big cuts.

My point exactly.
 
roguetrader
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 9:35 am

As always, its important to check the facts versus listening to mere opinions stated above. People like to say things that sound like facts, but which are really only what they wish were facts, what their dad told them, or what they guess are facts.

US is not on borrowed time, it was the only major to post a (modest) profit for the last quarter. Not simply an operating profit - a full, bona fide profit. Someone said thats 'only because they cut pay,' as if cutting costs is like cheating or immoral. They said they may have a loss for the rest of the year, but the only prudent thing to say is that times are tough and that they need more help. Sailing along in bankruptcy protection is an easier business enivornment with more lax rules.

Its interesting, when UA and US first declared bankruptcy, one theory was that the first to declare bankruptcy would end up being the healthiest airline, as some thought all the majors would have to declare bankruptcy sooner or later. UA employees were telling us that AA, CO, etc... would be next. US has taken bankruptcy protection and done some good and is now at worst a break-even airline, with more progress coming. United, however, has perhaps insurmountable problems. UA's load factor was 86% last quarter! How do you not make a profit with all those filled seats? By having an 87% break even load factor!

Northwest lost 182 million, United lost 247 million and Delta lost 1.65 BILLION (of which 312 million was cash). CO and AA are very near to breaking even, recording operating profits, but posted small overall losses.

NW does not have the most cash, at 2.9 billion, American does at 3.9 billion. The amount of cash on hand is the key to these quarterly figures. The one thing airlines learned after Pan Am, Eastern, Braniff, etc... disappeared is that you've got to have a LOT of cash to weather airline industry storms. In fact, you can perhaps predict which airlines are likely to surivive or die based only on how much cash they have in the bank - a figure made known to the public every quarter.

All the US majors have an adequate amount, although United is in the worst shape with only 838 million in unrestricted cash, compare this to a considerably smaller airline - Continental - with its 1.8 billion in unrestricted cash. It is generally thought by airline analysts that the big three airlines need at least a billion in cash at all times to safely operate. UA is dangerously flirting with its liquidity, and its management seems unable to make sweeping changes or do anything thoughtful to turn it around. (What is it about the second time UA tries to build an airline within an airline - Ted - that makes management think it will work?) For this reason, and the fact that their service is horrible, I argue UA is the most likely to disappear. But, I don't think they will this time unless they get one more major blow, like even higher fuel prices, a strike, etc...

The bad news is that the profitable and close to proftable (US/CO/AA) will get cocky and start buying new aircraft again, repeating the cycle of building up too much capacity while good aircraft sit in storage. Its a crazy business.

kind regards,

RogueTrader

all figures taken from quarterly financial releases found on airline websites
 
boeingpride800
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 9:36 am

If a major U.S. carrier was to disappear it would most likely be US Airways. US Airways is in the worst financial situation out of all the U.S. legacy carriers. Honestly, if I were to decide what will happen to US Airways I would resign most of their service, sell all the 757's, 767's, and A330's, keep the regional aircraft, 737's and become a major regional carrier. US Airways will probably get back on its feet but not very easily. If they would down size there operations it would probably help.
 
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yyz717
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 10:46 am

US is not on borrowed time, it was the only major to post a (modest) profit for the last quarter. Not simply an operating profit - a full, bona fide profit.

US itself has stated it may need to file for Chap 11 again. The CEO recently stated in a public employee communique that US was in serious trouble and may not survive. This would suggest that US is indeed on borrowed time, whatever your snapshot of their cash position. Moreover, given the recent attack on their fortress PHL by WN, US is in a more precarious position than ever. Does US have the financial strength to withdstand further competitive inroads, another 9-11, or an economic downturn? The answer would appear to be an emphatic no.

As always, its important to check the facts versus listening to mere opinions stated above. People like to say things that sound like facts, but which are really only what they wish were facts, what their dad told them, or what they guess are facts

Same advice applies to everyone I would say.





[Edited 2004-08-03 03:56:00]
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
freshlove1
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 11:19 am

No airline, even A.Nets golden child WN, has enough resources to survive another 9-11. The only reason the US CEO is saying this is to get the costs in order so US can proceed forward, but that took a step backward with the posting of profit this quarter so I would look at any pay cut offer more closely now. WN is not really doing that much to US in PHL, what they got 28 flights a day compared to US 100's. Until WN gets 100's of flights out of PHL they are really no threat to anyone there.
 
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yyz717
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 11:22 am

WN is not really doing that much to US in PHL, what they got 28 flights a day compared to US 100's. Until WN gets 100's of flights out of PHL they are really no threat to anyone there.

28 daily flights in any market is enough to seriously drive down yield. It is not (and indeed never was) a market share game. It is a profit game. WN can easily bring US to its knees in the PHL hub with fewer flights than US.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
m404
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RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 11:24 am

Wait a minute. Lets go back to your original premise it seems there are way too many seats for passengers these days.

The following are LFs for six Legacy carriers compared to same months last year as reported in AWST 7/19

April May June
United 79.9 up 8.5 80.1 up 2.9 86.0 up 4.0
American 74.9 up 4.4 73.1 dn 0.5 79.0 up 0.2
Delta 74.4 up 3.9 73.9 dn 0.4 81.9 up 1.4
Northwest 80.2 up 8.3 80.7 up 5.3 86.4 up 4.6
Continental 77.0 up 4.6 74.7 dn 1.2 82.4 up 1.4
US Airways 79.8 up 5.7 75.4 up 1.9 81.6 up 3.0

Average 77.7 76.3 82.7

Yields however are:

12.07 up .7 11.56 dn 1.8 Not yet avail

I'm sorry but I am unable to import the correct spacing to make this chart legible and A.net does not provide space bar use but here is the link to the article:

http://www.aviationnow.com/avnow/news/channel_awst_story.jsp?view=story&id=news/07194air.xml

Figures on yield include Alaska and American West from the ATA

One member here asserts that carriers are near a 90% average now. I cannot ascertain that but NW, who had the highest LFs in all thee months above, finished July at 85.6 in preliminary figures. A note must be added here that once summer is over those same figures drop precipitously. These figures are rather incredible, higher than at any time in my memory. If there are "way too many seats", they are not here.

The actual breakeven point for individual Legacy carriers are usually not available but has been guessed at around 82/84 percent dependent on costs, debt, and most certainly yield. To keep market share/load factor up fare have to be enticing when compared to the LCCs.

Understand that there are many parked aircraft not in the active fleets. These are brought back when, among many other things, the Load Factors are so high we are actually turning away passengers. One problem with this is it takes more employees to operate additional flights. Add to that the landing fees, enroute costs, maintenance, and other costs what actual benefits are to be gained aside from the grail of Market Share? If it costs more to fly the additional time fly than not, you don't. (That is, unless your marketing department is obsessed by the above goal and has too much control of the operation at an individual airline)

If you say too many seats are available the only way this would appear a viable statement is that those seats must belong to the LCCs as they need less filled to make a profit as they seem to be doing. The passengers filling the seats of the Legacy carriers above have largely researched the fares and convenience levels and chosen them carefully. How easy would it be to replace those factors if a carrier stopped flying? Of course all carriers would rush capacity into the vacuum. As has been said, between aircraft on order and in the desert, most would be replaced within a year at most. This might take longer on the international routes. So what has happened in this scenario? That same excess capacity you use for a cause for dissolution has simply been replaced.

In summation, what I'm saying is that with the numbers we have, empty seats are not the problem. It's the costs of providing the seats. Plainly, enough passengers are out there at least until the next financial hiccup. Perhaps if you said a Legacy carrier has to go before factors at the remaining carriers are frightened enough to actually make the necessary changes to become profitable, then I might agree with your reasoning. A reader above says that UA may be only a single percent LF away from black ink. At 87% I must ask what happens in the off season when loads average 55 to 65 percent? I'm sure I am nearly alone in this but an 87% LF is unsustainable.
Less sarcasm and more thought equal better understanding
 
roguetrader
Posts: 1404
Joined: Tue Aug 03, 2004 5:14 am

RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 11:26 am

Yyz,

You're stating opinions and heresay, not facts. If you have a quote or figures, post them and their source. The CEO of US is trying to get concessions from labor and is counting on a few scare tactics - Delta is doing the same thing. By no means is US in perfect shape, but its got more than enough cash to last for quite a while even if things take a big downturn. Its got twice the cash of United, but is only about half as big! Most available metrics at US are up, some by a lot, including load factors, while general costs and labor costs are falling. If it weren't for a huge increase in oil prices this year, US would be very profitable, in the hundreds of millions of dollars.

The figures and facts are the only thing that matters and the only unrefutable truth. If you can find some that make US look worse than UA or most other airlines, that would be a valid way to make your argument.

If another blow comes to the industry, like fuel spikes or another terror event, US will survive simply because UA will not. UA is in considerably worse shape, still in bankruptcy, and short of cash. If something happens, UA dies and US and all the others thrive on the carcass.

kind regards,

RogueTrader
 
roguetrader
Posts: 1404
Joined: Tue Aug 03, 2004 5:14 am

RE: Will A Major US Carrier Disappear?

Tue Aug 03, 2004 11:34 am

The actual breakeven point for individual Legacy carriers are usually not available

Break even load factors are known and printed by every airline in their quarterly financial reports. Reading these reports is helpful in speaking accurately about airline health and they are available on the websites.

kind regards

RogueTrader