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":
- 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.
- 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
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.
- 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
, and DTW
, are virtually void of any lowfare carriers, and what little they do face is miniscule when compared to what AA
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.
- 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
, 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.
- 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.
- 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.