Cory6188
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CO Loses $16 Million In Third Quarter

Tue Oct 19, 2004 8:05 pm

CO just put out their third quarter earnings. $16 million loss after a $22 million special charge for their MD-80s is not bad at all in my opinion. It's a far cry from DL's $675 million, at least.

You can read the full release here:

http://phx.corporate-ir.net/phoenix.zhtml?c=85779&p=irol-newsArticle&ID=632331&highlight=
 
N670UW
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RE: CO Loses $16 Million In Third Quarter

Tue Oct 19, 2004 10:56 pm

They would have made a profit if it weren't for special MD-80 retirement charges. Not bad.

Still, though, high fuel prices are killing everybody.



670
 
kl911
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RE: CO Loses $16 Million In Third Quarter

Tue Oct 19, 2004 11:18 pm

How about all those new international flights startup costs? In which Q will we see that impact, and how much of an impact will it be?

KL911
 
planemaker
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RE: CO Loses $16 Million In Third Quarter

Tue Oct 19, 2004 11:56 pm

Still, though, high fuel prices are killing everybody.

Not SWA... yet!  Big grin

I think that the high fuel prices "rationale" for poor profits is a "smoke screen" for an extremely competitive environment where no one wants to blink first, increase air fares and MAINTAIN them! Look at all the failed attempts...
yet look at the record high load factors... it is not that people are not flying and need such low fares to continue to fly.

So, even if fuel prices drop, the carriers would just lower their fares in the lockstep suicidal competition that we have been witnessing for a while now!

With the way things are going, this industry is not going to recover for a long while!!
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
erikwilliam
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 12:37 am

Comparing to other US carriers, how´s CO situation??
I know Delta, United, UsAir are real bad, but how about the others. Jetblue, Frontier and Southwest are doing fine, strugling to have some profits, but the have it. How´s Song and TED doing, are hey really helping Delta an United?

And here´s another question, a bit off topic, don´t U guys think that given these huge offer of seats and companies etc etc, and as the aviation market is very competitive, any crisis situation like 9/11( let´s hope never again) or oil prices, wars, thunderstorms or snowstorms, anything can influence this specific market in a really bad way, like we see now. There are too many players, and to survive they have to put their profit margin down, and given the amount of money in play, any slight detail can cost milions and milions. Wouldn´t it be better to have less players, make the "healthy" ones get "healthyer" and slowly eliminating the "sick" ones???
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727LOVER
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 12:45 am

Btw, is there an official retirement date for the MD-80s?

How many are still operating?
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luv2fly
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 1:01 am

I am not sure when they will be gone officially, I do know there is only a handful left right now.
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dutchjet
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 2:13 am

While CO is certainly doing better than most US carriers, and actually made a modest profit before the special charge relating to MD80 retirements (note another special charge is coming in the 4th quarter), one must consider that the 3rd quarter is the time when airlines should make LOTS of money....travel and demand is generally at its highest during this period which increases revenue. Losses should be expected in the coming 2 quarters, especially as the impact of sky-high fuel prices really begins to affect bottom line results. Thus, while CO should be congraduated for doing better than most, its not really time to celebrate yet. CO's expansion to Europe cannot come at a better time, the percentage of revenue that CO derives from international operations is rising, and by opening services to new destinations with existing 757 equipment could prove to be real revenue maker for CO. ALso note that CO's cash on hand, at over $1.5 billion, is rather good and should allow CO to get through the next couple of quarters without any real problems.

When the US and world economies fully recover, and fuel prices moderate to some reasonable level, CO will certainly be in a position to make some real money....a good route structure, modern and economical aircraft, and a reputation for good (if not great) service should make CO a winner among US carriers.
 
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iahcsr
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 4:54 am

Last count I saw was six MD80s. Last flight(s) should be between late Dec. and early Jan.
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N1120A
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 5:00 am

WN is making lots of money and has fuel hedged for the next 5 years. B6 has warned profits will be down due to hurricane related issues but should still be ok. F9 has not been majorly profiting lately, but should come out of the slump soon. CO has actually been having these kind of small profit numbers for a while now (before the charge). It is like they are teasing us before they become the first legacy to break out a real profit
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spacecadet
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 6:32 am

I think that the high fuel prices "rationale" for poor profits is a "smoke screen" for an extremely competitive environment where no one wants to blink first, increase air fares and MAINTAIN them! Look at all the failed attempts...

I agree. While in absolute terms fuel prices are very high, when adjusted for inflation they're still lower than they have been in the past.

The problem is companies build various costs into their accounting forecasts and they obviously weren't counting on today's prices. But it's not the absolute costs that are killing them, it's just the unexpected rise. The costs themselves they should be able to bear - if they can't, they shouldn't be in the airline business. They understand that fuel prices rise and fall.

Fuel prices are scapegoated around here a lot. It's really a red herring. Low fares are the main problem, brought on by cut-throat competition. I mean, at the end of the day, the point of any business is to raise revenue through selling a product or a service, and airlines can't charge a self-sustaining price on their product right now. On the cost side, labor costs are a bigger issue for most airlines than fuel costs.
I'm tired of being a wanna-be league bowler. I wanna be a league bowler!
 
wgw2707
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 6:47 am

High fuel prices don't HAVE to kill anyone. If all the airlines would intelligently hedge their fuel oil, they wouldn't been in this mess. One reason WN is doing so well is judicious fuel hedging. Delta on the other hand has not hedged any fuel at all and is a complete victim of fluctuations in fuel price. Fuel is one of the two greatest expenses for the airlines, and airlines that don't hedge it, that is, fix the cost of it for a period of time, are crazy. Continental has been hedging fuel since 1995, I think, which explains why their losses are narrow and present only because of one-time charges.

-WGW2707
 
DfwRevolution
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 6:54 am

High fuel prices don't HAVE to kill anyone. If all the airlines would intelligently hedge their fuel oil, they wouldn't been in this mess. One reason WN is doing so well is judicious fuel hedging.

Honest to god it isn't easy to hedge fuel by any means. An airline must have rock-solid credit and significant cash reserves for them to hedge effectivly. Delta does not have this. What kind of a business would take the risk of hedging to DL?

And second, all DL has to do is raise their fairs. Even with FL in ATL, they have a a near monopoly on the area.

And third, as you mention, fuel is one of the two big cost. The other is payroll, and we all can see how willing the DL staff are to take pay cuts.... they'd be screwed either way. DL is a goner and I'm not really going to miss it.
 
SESGDL
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 7:15 am

"And third, as you mention, fuel is one of the two big cost. The other is payroll, and we all can see how willing the DL staff are to take pay cuts.... they'd be screwed either way. DL is a goner and I'm not really going to miss it."

One of the most ignorant posts I've ever seen. DL is a goner, blah blah blah. DL hasn't even filed for bankruptcy yet and you're already saying they're done. Maybe you need to check your facts. Also, DL has a near monopoly on ATL?!? WRONG! ATL is one of the most competitive hubs of ANY major US carrier, we can't say that about AA's monopolized DFW hub now can we?

Jeremy
 
ual777contrail
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 7:47 am

Dont compare the size of CO to DL, BIG, BIG, differance.
That is very good.

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DfwRevolution
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 8:07 am

DL is a goner, blah blah blah. DL hasn't even filed for bankruptcy yet and you're already saying they're done. Maybe you need to check your facts.

Well both Charles Schwab and Merryil Lynch estimate the probablity of Ch.11 at 85% or higher. They have lost more than 600 million dollars for consecutive quarters, or roughly 30 million dollars a day. Even if they are no where near bankruptcy, this is absolutely unacceptable and shows the fallability of their leadership. Waiting to bankruptcy to wake-up is a terrible idea, and yet, what major reogranizations have they made? Zero.

When an airline enters Ch.11, they are a TWA800 from losing the confidence and support of their customers and creditors. A high-profile disaster is a major pain to a healthy airline, and a death-blow to weak ones. By slipping into piss-poor financial health, DL is really just rolling dice and praying all goes well. When the fate of your business hangs on variables that are out of your control, you are asking to be screwed.

And Ch.11 is by no-means a safe haven. If you cannot secure creditors and bankruptcy courts deem it isn't in the interest of consumers for you to survive... you're planes end-up flying for another airline. Name one financially prudent discion that DL has made in the past 5 years? I ask for just one.

DL has nothing to show creditors they have a sound plan for working through bankruptcy, creditors are all looking at the song-and-dance UA is putting on, and I will not be suprised in the least when creditors say "not a chance in hell," and move on. Investing in bankruptcy reconstruction is a huge risk for an investor... when you could just put that money in FL stock and let them be place in the sun. I don't think DL will liquidate, but a heavy reconstruction and layoff is inevitable.

[Edited 2004-10-20 01:24:27]
 
planemaker
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 8:18 am

As a comparison, according to the Detroit Free Press, Northwest is expected to post a third-quarter loss of $70 million.

http://www.freep.com/money/business/northwest19e_20041019.htm

FI reports that CO sees the probability for continuing losses in 2005 and is already close to asking for concessions from employees

It was also mentioned that CO will start 757 service to Stockholm.

[Edited 2004-10-20 01:49:45]
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
ramerinianair
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 8:53 am

WOW WAY TO GO GORDO!!!!
They just amaze me. They might not be the biggest but thye are the only full service carrier in America to post anything that close to a profit.
Great for them!!!
SR
W N = my Worst Nightmare!!!!!
 
bigb
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RE: CO Loses $16 Million In Third Quarter

Wed Oct 20, 2004 9:04 am

Dont compare the size of CO to DL

I agree
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