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Ncfc99
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US Airlines Health

Thu Jun 23, 2005 2:36 am

I am new(ish) to this site and constantly see threads relating to the US Airline companies and the financial health they are in. Could someone please give me a basic rundown of how they are doing (i.e. United, US airways, CO, Delta, AA etc.). Also a basic description of what chapter 11 is for us simple folk would be appreciated.

Thanks in advance.
 
aa757first
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RE: US Airlines Health

Thu Jun 23, 2005 2:46 am

Chapter 11 is when various debts are cancelled or reduced so the airline can emerge more financially stable. Also, union contracts can be shredded and changed at managements discretion.

US Airways - Terrible, the only thing they have is the tiny European network and parts of the Caribbean. They are loosing money on everything else and will probably die if they don't merge with America West.

United - As you know, they are still in Chapter 11. I don't really keep up on them.

American - One of the better off majors. They own the Caribbean and have a good deal of the marketshare within Philadelphia. They also have a bunch of very loyal business fliers.

Delta - Not so good. AirTran has matched every route on the East Coast out of Atlanta and now some cities on the West Coast. They also have a pretty varied fleet.

Northwest - Up until a while ago, pretty good. Northwest's labor costs are about four times what AirTran's and jetBlue's are, however. They need concessions quick. They have the aging fleet but are replacing them slowly. Remember, they are already paid off.

Continental- The best of the big six. They have a new and simple fleet, huge European network, a slice of the Caribbean and a hell of a lot of Mexico. They have a good product, reasonable costs and very, very loyal travelers.

AAndrew
 
FriendlySkies
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RE: US Airlines Health

Thu Jun 23, 2005 4:06 am

They're all in critical condition...UA, US, DL, NW are code blue.  Wink
 
DAYflyer
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RE: US Airlines Health

Thu Jun 23, 2005 4:09 am

They are all pretty much on life support at this stage. Only Jet Blue, Airtran, Southwest, Alaska, Spirit and the other LCC are doing ok. All of the legacy carriers are in the financial crapper, without an end in sight.
One Nation Under God
 
commavia
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RE: US Airlines Health

Thu Jun 23, 2005 4:21 am

Generally speaking, all of the U.S. legacy airlines are limping along. This would be my general description of each one's condition at the present, ranked in order of "healthiest" to "weakest":

1) AA - American is doing just about as good as any legacy airline could be right now. The company has been generating positive cashflow the last few quarters and has a very good chance of making a real net profit for this quarter. AA is operating one of the leanest, most efficient and most productive operations in the U.S. -- legacy or non-legacy -- and is trying to work with unions and labor groups to turn the company around collaboritively.
Bottom line: AA is doing pretty well, relative to its legacy carrier peers.

2) CO - Although CO is carrying a very sizeable long-term debt load right now relative to its size, and does have virtually no unencumbered assets, it has a whole lot more going for it than working against it. CO is an innovative, creative company with great employees and is having great success in turning EWR into the European hub and IAH into Mexico north with all the RJs. CO's costs are already fairly low because of its two trips through bankruptcy in the 1990s and it is seeking additional concessions right now. CO has a fairly well laid out network, short of virtually no presence in the west, and is doing about the best it can given the difficult financial burden it faces.

3) NW - All the threats and fears of bankruptcy notwithstanding, NW still isn't in bankruptcy yet, and they still do have some of the best fundamentals in the industry. Despite their high labor costs, their non-labor costs are very competitive and, perhaps most importantly, they are the least exposed of all the legacy airlines to low fare competition. All three of their hubs, MEM, MSP, and DTW, are virtually void of any lowfare carriers, and what little they do face is miniscule when compared to what AA, DL and UA are up against. Also, while their fleet of DC9s is very old, NW owns all the planes outright given them the operational and financial flexibility to adjust capacity with demand.

4) DL - Delta may be close to bankruptcy, but it's not there yet. Their pilot costs have to come down in order for them to survive, and I think even their pilots know it. They do have a fairly well-balanced domestic network, are strong to Europe, but have virtually no presence in Asia. However, this seems to be working for them. They do, however, face lowfare competition in almost all of their markets up and down the east coast, and are coming under continual yield-destroying assault from WN, FL, B6, DH, etc. on flights to Florida, which account for a huge amount of their network. Delta isn't in bankruptcy yet, but that is where they are headed if they can't stem the tide of $1B losses each quarter.

5) UA - Slowly but surely, UA is trying to build itself back from bankruptcy and pull itself back from the brink. UA seems to have gotten their costs down now that they have ended their pensions, and probably will emerge from protection in the next 4-6 months. UA's international network is very well-balanced, with a strong presence in Asia and fairly good coverage of Europe. UA is weak to Latin America, but the license to print money they have on the Asia runs more than makes up for it. If UA can continue to build back, they could very well be moving up this list in a few months time.

6) US - If there is one airline in the U.S. on deathwatch, IMO, it's USAirways. As said as it is to say, US -- with or without HP -- is just limping. Morale is horrible among employees (understandably) and they continue to face a full-on assault at their second largest hub (PHL) from an airline that can pretty much beat them on cost and price in just about every market (WN). Not to mention the bloodbath they are taking up and down the east coast (pretty much their entire network) because of DH. The only real brightspots to this story are the fact that their Europe and Caribbean flights continue to outperform, but they can't subsidize a fundamentally loss-making network forever.

I apologize for being so long, just my $.02.
 
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Ncfc99
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RE: US Airlines Health

Thu Jun 23, 2005 8:55 pm

Quoting Aa757first (Reply 1):
Chapter 11 is when various debts are cancelled or reduced so the airline can emerge more financially stable. Also, union contracts can be shredded and changed at managements discretion.

Thanks. Just what I was looking for.

Quoting Commavia (Reply 4):
I apologize for being so long, just my $.02

Not long, informative. Thanks Aa757 and Commavia for taking the time to reply.  bigthumbsup   bigthumbsup 
 
1MillionFlyer
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RE: US Airlines Health

Thu Jun 23, 2005 10:31 pm

Quoting Commavia (Reply 4):
Their pilot costs have to come down in order for them to survive

The pilots agreed to a one billion dollar salary cut last December, this has already been done.
Golf Foxtrot you are cleared for departure
 
A330323X
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RE: US Airlines Health

Thu Jun 23, 2005 10:54 pm

Quoting Aa757first (Reply 1):
Also, union contracts can be shredded and changed at managements discretion.

They most certainly can not.

Quoting Aa757first (Reply 1):
American - One of the better off majors. They own the Caribbean and have a good deal of the marketshare within Philadelphia.

What are you talking about? AA has about a 4% market share at PHL.
I'm the expert on here on two things, neither of which I care about much anymore.
 
commavia
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RE: US Airlines Health

Thu Jun 23, 2005 11:10 pm

Quoting A330323X (Reply 7):
They most certainly can not.

When you're in bankruptcy, it's a whole lot easier -- perhaps not effortless -- but very easy, for management to "shread and change" contracts. All you need is a judge willing to hear you and a reasonable argument that the union contracts are standing in the way of the company's financial health. UA was successfully able to argue it, so was US, and I doubt if DL or NW would have too much trouble doing it should they be forced to file.