daily menu » rate the banner | guess the city | one on oneforums map | privacy policy | DMCA | news magazine | posting guidelines

Go Back   SkyscraperCity > Infrastructure and Mobility Forums > Airports and Aviation

Airports and Aviation » Airports | Photos and Videos



Global Announcement

As a general reminder, please respect others and respect copyrights. Go here to familiarize yourself with our posting policy.


Reply

 
Thread Tools
Old July 8th, 2009, 06:55 AM   #101
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Airline traffic fell again in June, giving hints of second-quarter losses
7 July 2009

DALLAS (AP) - Airline traffic fell again in June, providing another sign that most carriers are likely to report large financial losses for the second quarter.

A downturn in business travel has robbed the airlines of their best customers. They've compensated by cutting prices to attract leisure travelers, but the math just doesn't work out.

One by one over the past few days, all the major U.S. carriers reported June results, and several reported double-digit declines in key financial measurements.

"You are going to see some pretty ugly earnings numbers from the airlines for the second quarter," said Stifel Nicolaus & Co. analyst Hunter Keay. "Everybody is in the same boat on demand and pricing. It's tough out there."

All the leading U.S. airlines reported that June traffic fell compared with the same month last year. The average drop at the biggest eight companies was 6.1 percent.

The sharpest declines were at AMR Corp.'s American Airlines and American Eagle, off a combined 7.9 percent; and UAL Corp.'s United Airlines and its regional affiliates, down a combined 7.5 percent.

Airlines measure traffic in miles flown by paying customers, a figure that doesn't take into account how much the passengers paid for their tickets.

But other statistics do consider price, and they are telling a sad story for the airlines.

Continental Airlines Inc. and US Airways each said that unit revenue -- sales per available seats times miles flown; a closely watched measurement of financial performance in the industry -- fell about 20 percent from June 2008.

"These declines in unit revenues are driven by weaker demand for business travel and lower leisure yields as a result of the global economic recession," said Scott Kirby, president of Tempe, Ariz.-based US Airways.

American, the nation's No. 2 airline operator behind Delta Air Lines Inc., said in a regulatory filing last month that second-quarter unit revenue would be down by 16 percent to 17 percent for the entire second quarter.

Southwest Airlines Co. said unit revenue in June fell 9 or 10 percent.

"Ten percent in the old days would be a disaster," said Michael Derchin, an analyst for FTN Equity Capital Markets, "but now it looks pretty good."

Derchin said Southwest, JetBlue Airways Corp. and AirTran appeared to be holding up better financially than bigger rivals because consumers think of them first when looking for cheap fares, and because their domestic networks are insulated from the plunge in international travel.

U.S. airlines pushed through two fare increases in June, which Derchin said could lead to better unit revenue in July and August.

On the other hand, Southwest, AirTran and Frontier offered a new round of cheap flights this week, many under $100, extending in some cases into January. The sale prices were available for only a few days, and it was not clear how many seats those airlines were offering at the rock-bottom prices -- "not many, is my guess," Derchin said.

June's traffic numbers, as bad as they were, were slightly better than May's at six of the eight largest U.S. airline companies.

Analysts said that wasn't enough to call a trend -- traffic declined more slowly in April after a horrendous March, which raised hopes that a travel recovery was under way. Those hopes were dashed in May.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote

Sponsored Links
Old July 10th, 2009, 12:34 PM   #102
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

With demand on the rocks, U.S. airlines offer sales

CHICAGO, July 9 (Reuters) - U.S. airlines, plagued by slumping business travel demand, may face lean bookings in the late summer and early fall, and some carriers hope fare sales will spur enough leisure travel demand to fill the gap, experts said on Thursday.

A sweeping fare sale by Southwest Airlines this week illustrates the need to generate bookings at the tail end of the busy summer travel season.

The low-cost carrier on Tuesday launched a 2-day sale that amounts to one of its biggest ever. Other carriers matched in some markets.

"With Southwest coming out with that unbelievable sale, and some airlines matching and some not, it clearly has to tell us that things are not looking good," said Terry Trippler, at tripplersview.com, a travel opinion website.

He said the sale and its timing -- for travel from Sept. 9 to Nov. 18 -- reflect concerns that industry capacity cuts are not expected to keep pace with weakening demand.

"If we don't see another sale in two weeks, then it did its job to generate enough traffic," Trippler said. "I think it probably did."

The airline industry has been hard hit by the economic recession that has eroded travel demand. Meanwhile, carriers must contend with extremely volatile fuel prices that make their operating expenses difficult to forecast.

Airlines slashed their capacity late last year and continue to do so in 2009. Last month, Delta Air Lines and American Airlines announced new cuts that take effect later this year. Other carriers are expected to follow.

Until the new round of downsizing occurs, airlines are likely to launch sales to bolster demand and fill planes, said airline consultant Michael Boyd.

"There is a free fall in demand," Boyd said. "I think the sales are just to fill up the gap between now and roughly October or November."

He predicted that by December the U.S. airline industry will have cut capacity by 12 percent year over year.

Airlines typically do not provide detailed bookings outlooks, but some executives have complained recently of weakness in business travel this year.

US Airways Chief Executive Doug Parker told Reuters in an interview on Wednesday that he sees some modest signs of recovery in business travel demand, but that it is too soon to call it a recovery.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 10th, 2009, 01:29 PM   #103
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Air Hubs Pay to Keep Their Spokes
10 July 2009
The Wall Street Journal

PORTLAND, Ore. -- Portland is one of a handful of cities willing to pay big bucks to keep it connected with the rest of the world.

The city's port authority voted this week to make a one-time cash payment of $3.5 million to Delta Air Lines Inc. to maintain the city's only direct link to Asia, a daily nonstop flight to Tokyo that the carrier had planned to terminate in September.

Deutsche Lufthansa AG confirmed this week that it would end its Portland-Frankfurt route in September because it wasn't profitable, leaving Delta's nonstop to Amsterdam as Portland's sole direct link to Europe. Last year Portland lost its only scheduled nonstop service to Latin America, a Mexicana Airlines flight to Guadalajara.

Smaller cities are ramping up subsidies to keep airlines from cutting routes as a stiff recession sends air traffic tumbling. "Airports are desperate," said Brian Busey, co-leader of the aviation practice at the law firm Morrison Foerster LLP in Washington.

Incentive programs have become increasingly common in recent years as airports and communities recruit carriers to fly routes that wouldn't otherwise be profitable. A longstanding federal program also provides funding to connect small cities by air.

But the Portland pact with Delta points to a new trend in which airports are giving away money to simply retain airline routes rather than recruit new ones. The direct payment also departs from typical deals that waive landing fees, share in marketing expenses or provide revenue guarantees.

Peter Kirsch, a partner at Kaplan Kirsch & Rockwell LLP in Denver, said his law firm is advising "several" U.S. airports on possible retention deals with airlines on domestic and international routes. Portland's pact extends Delta's Tokyo service until May.

In lobbying for the deal, Port of Portland officials said direct Tokyo flights generate $61.2 million in annual economic impacts to the region, helping local companies more effectively compete in the global marketplace.

David Zielke, Port of Portland's manager for air services, told port commissioners the pact would allow Portland to continue being the country's smallest city with both trans-Pacific and trans-Atlantic air links. The city has about 575,000 residents, with a metro-area population of more than two million.

Recession-battered airlines are expected to post $9 billion in losses globally this year, including a $1 billion loss among North American airlines, according to the International Air Transport Association. Passenger revenue globally and in the U.S. fell about 30% in May from a year earlier.

Airlines are continuing to scale back flights to trim losses. Seat capacity has shrunk by more than 5% since last year. But midsize airports have suffered a particularly steep falloff in international passenger traffic. Scheduled cross-border flights at such U.S. airports -- including Portland's -- are down 25% this month from a year earlier, according to the Airports Council International-North America, an umbrella group for airports.

Major airlines' traffic through Portland declined nearly 6% last year to less than 10 million passengers, said Bill Wyatt, executive director of the Port of Portland. Through the first six months of 2009, traffic was down 13% from a year earlier, he said.

Tucson International Airport in Arizona is weighing an incentive program to try to restart cross-border flights. Despite its name, the airport hasn't had any international routes since Aeromexico stopped flying to Hermosillo, Mexico, in September.

Myrtle Beach International Airport also doesn't have any international flights, but it hopes to attract some new cross-border routes through an incentive program that was renewed last month and offers steep fee discounts. Allegiant Air launched domestic service to the South Carolina beach resort this spring after accepting such incentives.

Pittsburgh International Airport inked a pact with Delta in February to launch service to Paris -- the city's first direct European link in several years. To attract Delta, the airport authority agreed to waive landing fees for two years and kick in $300,000 in marketing funds. A local economic-development group provided revenue guarantees.

Such incentives are "especially important given the current economic recession," said Deborah McElroy, a vice president of policy in Washington at Airports Council International, the industry group.

To pass muster with the Federal Aviation Authority, Portland wasn't allowed to use airport revenue to pay Delta. The money will come from general funds of the Port of Portland. It also would have to offer the same financial support to any other carrier that wants to offer the service.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 10th, 2009, 04:17 PM   #104
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

US Airlines See More Red Ink
9 July 2009
Dow Jones

TAKING THE PULSE: Planeloads have generally been higher as carriers cut capacity, and some airlines last month raised fares across parts of their domestic networks twice in as many weeks amid signs the travel market was stabilizing. But many are still seeing a slump in business and leisure demand, and Southwest Airlines Co. (LUV) earlier this week sparked a fare war when it offered one-way flights for as low as $30.

Revenue, cash generation and access to aircraft financing have become the key focuses for airline investors during the sharp fall in global passenger and cargo traffic. The U.S. Justice Department's recent belated rejection of the Star Alliance's plans to cooperate more closely could hurt airlines' abilities to cut capacity further and leaves members of other alliances worried about future plans for collaboration.



COMPANIES TO WATCH:

AMR Corp. (AMR) - Reports July 15
Wall Street Expectations: Analysts surveyed by Thomson Reuters expect a loss of $1.20 a share on revenue of $4.97 billion for the parent of American Airlines. For the same period a year earlier, the company reported a loss of $5.77 a share on $6.18 billion in revenue. The prior-year results included $1.2 billion in write-downs and severance charges.

Key Issues: The company said in April it has financing in place to cover most of the 68 aircraft due for delivery by the end of next year. As it raised some fares, and later cut others in response to Southwest's move, AMR projected mainline unit revenue for the quarter to fall 16% to 17% while total cargo and other revenue drops 7.8% to 8.8%.


Continental Airlines Inc. (CAL) - Reports July 21
Wall Street Expectations: Analysts project a loss of $1.34 a share on revenue of $3.16 billion. That compares to a prior-year loss of 3 cents a share and revenue of $4.04 billion.

Key Issues: Chairman and Chief Executive Larry Kellner said last month the falloff in corporate travel, the most profitable part of the airline business, is stabilizing, although there is no sign of a recovery yet. He also noted the company had a tough spring in the New York area.


Southwest Airlines Co. (LUV) - Reports July 21
Wall Street Expectations: The discount carrier is seen posting earnings of 8 cents a share and revenue of $2.61 billion, down from 44 cents and $2.87 billion a year earlier.

Key Issues: Pilots at Southwest, which has posted three straight quarters of losses, last month narrowly declined to ratify a new five-year contract. The carrier has increased some fees and implemented new ones while recently saying it will allow passengers to bring small dogs and cats in the cabin for $75. Other carriers have allowed the practice for a fee.


UAL Corp. (UAUA) - Reports July 21
Wall Street Expectations: The United Airlines parent is seen posting a loss of $2.60 a share and revenue of $4.09 billion. The prior year's loss, including $2.6 billion of write-downs and charges, was $21.47 a share while revenue was $5.37 billion.

Key Issues: The Justice Department belatedly objected to a plan by UAL and Continental to cooperate on routes within the Star Alliance on antitrust grounds after the Transportation Department tentatively approved the plan earlier this year. Meanwhile, Fitch Ratings last month downgraded UAL to highly speculative territory on revenue worries.


Delta Air Lines Inc. (DAL) - Reports July 22
Wall Street Expectations: Analysts forecast a loss of 27 cents on revenue of $6.99 billion. Year-earlier red ink, including $1.2 billion of charges, totaled $2.64 a share on revenue of $5.5 billion.

Key Issues: The world's largest airline said last month that worries over the H1N1 virus, also known as swine flu, would cut second-quarter revenue by $250 million as it slashed service to Mexico, Latin America and Asia. Delta expects to restore some of that capacity during the rest of the year.

(The Thomson Reuters estimates and year-ago results may not be comparable because of one-time items and other adjustments.)
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 13th, 2009, 08:35 PM   #105
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

U.S. Airlines Fly Into Credit Squeeze
Plunge in Travel Demand Could Result in Bankruptcy Filings by Winter if Conditions Don't Improve

13 July 2009
The Wall Street Journal

The recession, plunging travel demand and a tough lending environment are battering U.S. airlines, raising the prospect of a liquidity squeeze that could lead to bankruptcy filings by winter if conditions don't improve.

The five largest hub-and-spoke carriers are expected to report second-quarter losses, starting with AMR Corp.'s American Airlines on Wednesday and followed by Delta Air Lines Inc., UAL Corp.'s United Airlines, Continental Airlines Inc. and US Airways Group Inc. next week.

The second quarter normally brings strong traffic and profitability, but this wasn't a typical spring. The few bright spots in a darkening industry landscape are the modest second-quarter profits expected from discount carriers Southwest Airlines Co., JetBlue Airways Corp. and AirTran Holdings Inc., and from Alaska Air Group Inc. Those four will also report earnings next week.

"Just as the airline industry was not built for $130 [per barrel] oil, neither was it built for an environment of negative global economic growth and nonfunctioning capital markets," Gerard Arpey, AMR's chief executive, said last month at an investor conference.

The recession continues to discourage high-yield business traffic, forcing carriers to discount heavily to fill planes with leisure travelers. May passenger revenue was down 26% on 9.5% fewer passengers paying nearly 18% less per ticket than a year earlier, according to the Air Transport Association trade group.

Continental and US Airways reported that their unit revenue -- the amount taken in for each seat flown one mile -- fell 20% in June compared with the year-ago month. Meanwhile, American's June traffic declined 8% and United's 10%. In a research note last week, Morgan Stanley estimated revenue at U.S. airlines will drop 18% for all of 2009.

Pinched capital lending remains a problem for airlines trying to maintain or build cash balances as they're burning cash. Only Southwest has an investment-grade credit rating, and Moody's Investors Service has negative outlooks on eight of the nine biggest U.S. airlines.

Reflecting pessimism about autumn bookings, Southwest last week launched one of its biggest fare sales ever, offering one-way tickets for as little as $30 starting in September, when demand historically tails off. "A recovery doesn't appear to be on the way yet," said Laura Wright, Southwest's chief financial officer, in an interview.

Fuel prices, which a year ago shattered records, are now at about $60 a barrel, $10 below the June 2008 average. But carriers' savings on one of their top expenses aren't enough to offset the plunge in demand, even though airlines have slashed the number of seats they're offering.

"The sheer collapse in unit revenue is pretty much unprecedented," said Bill Warlick, an airline bond analyst for Fitch Ratings.

Mr. Warlick recently cut the corporate credit ratings of Delta and United, pushing them deeper into speculative territory. While Delta has a relatively strong $5.3 billion in unrestricted cash, the company faces scheduled debt maturities of roughly the same amount before the end of 2011. Delta's ability to maintain its liquidity at current levels depends on improved credit-market openness and industry stabilization in 2010, Mr. Warlick said.

Delta declined to comment.

United, with about $2.5 billion in cash, must meet more than $650 million of debt and lease payments later this year and more than $1 billion in 2010. With this "unsustainable" capital structure, United may have trouble raising a large amount of fresh capital in the near term, Mr. Warlick said. United declined to comment.

Some carriers may have no choice but to seek protection from creditors this winter, when cash flow typically dries up. United, American and US Airways are the most vulnerable among large carriers, according to credit-rating agencies and Wall Street investment houses.

While he doesn't rule out one or more carriers filing as soon as this fall, Philip Baggaley, a debt analyst for Standard & Poor's Corp., says that "the more likely scenario is that they will manage to scrape by again." He adds, though, that "there's not a lot of room for error."

Like United, AMR and US Airways declined to comment.

US Airways has been through Chapter 11 twice since the 2001 terrorist attacks, and United and Delta, as well as Delta's recent acquisition, Northwest Airlines, have been through it once.

Some analysts wonder what good further restructurings would do.

"We might lose one along the way," said Bill Swelbar, a researcher at the Massachusetts Institute of Technology's International Center for Air Transportation. "It's hard to restructure zero demand."
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 15th, 2009, 08:07 PM   #106
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

US Airways to cut 600 airport jobs

CHICAGO, July 14 (Reuters) - US Airways Group on Tuesday said it would reduce airport staffing by 600 jobs this fall because of weak demand for business travel and declining revenue.

In a note to employees, the company's Chief Operating Officer Robert Isom said the cuts would occur in various of its airport-based operations. Isom said previous efforts to reduce US Airway's work force were possible through attrition.

"In today's economy, however, this is no longer the case with attrition hovering in the low single digits," Isom said. "So, we find ourselves with more employees than our operation requires."

The US airline industry has been severely battered by the economic recession that has eroded travel budgets. Carriers undertook sweeping downsizing last year and some airlines continue to shrink in 2009.

Shares of US Airways were down 1.42 percent at $2.08 on the New York Stock Exchange.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 21st, 2009, 06:44 PM   #107
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Continental Airlines posts 2Q loss, will cut 1,700 jobs and raise baggage fee
21 July 2009

DALLAS (AP) - Continental Airlines Inc. said Tuesday it will cut 1,700 jobs and raise fees for checking luggage after it posted a large loss for the second quarter amid falling traffic.

The Houston-based airline said Tuesday it lost $213 million, or $1.72 per share in the quarter ended June 30, compared with a loss of $5 million, or 5 cents per share, a year earlier.

Excluding one-time charges, the loss was $169 million, or $1.36 per share. Analysts expected a loss of $1.35 per share excluding charges, according to a survey by Thomson Reuters.

Revenue tumbled 22.7 percent, to $3.13 billion, nearly matching the $3.14 billion forecast by analysts.

The 1,700 jobs cuts Continental announced amount to about 3.4 percent of its work force. They are on top of plans to eliminate 500 reservations agents and to put 700 flight attendants on leave.

Continental aims to raise $100 million a year with higher fees. The carrier boosted by $5 the fees for checking bags on U.S. flights -- to $20 for a first bag, $30 for a second for passengers who check bags at the airport instead of online. The change took effect immediately for flights on or after Aug. 19.

The airline also added $5 to the fee for booking a reservation over the phone, and it said more revenue-raising measures were coming.

Chairman and CEO Lawrence Kellner said a key measurement of revenue as a ratio of capacity "appears to be bottoming out," but added "it is doing so at low levels and we must take aggressive steps to increase revenue and reduce costs."

Traffic measured in miles flown by paying passengers fell 6.4 percent compared with the second quarter of last year. Continental, including its regional affiliates, cut capacity even more sharply, by 7.8 percent, resulting in slightly fuller planes despite fewer passengers.

Airlines can cut capacity by flying fewer flights or using smaller planes.

The airline caught a break from fuel prices that were lower than last year, resulting in a savings of $762 million or 46 percent. But revenue dropped by $918 million from a year ago.

The swine flu outbreak, which devastated traffic to Mexico for a time, cost $50 million in lost revenue. But the recession was a bigger factor, as it cut into travel demand, especially among business travelers who often pay higher last-minute fares.

Continental took $44 million in charges during the second quarter to write down the value of it planes in the current airline industry slump.

Continental faces big changes in the months ahead. CEO Kellner announced last week that he is stepping down at year end and will be replaced by President Jeff Smisek.

In October, Continental expects to join the Star Alliance that includes United Airlines and Lufthansa. The Transportation Department recently approved antitrust immunity for Continental to work closely with its new partners in setting prices and schedules on international service.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 21st, 2009, 08:59 PM   #108
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

WSJ: Southwest Air CEO Kelly: Prepared For "Continued Weakness" After Summer
21 July 2009
Dow Jones News Service

Southwest Airlines Co. gave a bearish outlook for the coming months, despite eking out a second-quarter profit and spotting signs of better travel demand in July.

Chief Executive Gary Kelly said Tuesday that the largest U.S. low-cost airline by traffic has detected "a slight improvement" in traffic in July, typically a heavy travel month, but that management is bracing for "continued weakness" after the summer.

"Our outlook for the next three quarters is cautious given the economic and fuel price outlook," said Kelly in a conference call after the Dallas-based carrier reported revenue fell 8.8% to $2.62 billion in the second quarter from the year earlier period.

Southwest plans to trim its fleet by another eight to 10 airplanes during the second half of the year, after reducing it by five airplanes thus far in 2009. Its 543-airplane fleet of Boeing 737 airplanes likely will remain flat in 2010, added Laura Wright, the chief financial officer.

After growing by leaps and bounds, the airline expects its capacity to drop 5% to 6% in 2009 and a further 1% in 2010, said Wright during the conference call.

Still, Kelly said Southwest remains "open" to making acquisitions of airline industry assets, including airlines. But he said the airline remains committed to its all-737 fleet and that any deal would have to boost earnings. He added that Southwest has "absolutely no interest' in buying any regional jet operations.

Earlier Tuesday, Southwest said it booked a second-quarter net profit of $54 million, or 7 cents a share, reversing three straight quarterly losses. Still, the latest profit was smaller than the profit of $321 million, or 44 cents a share, it booked in the second quarter of 2008.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 22nd, 2009, 05:10 AM   #109
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Meltdown 101: Airlines resort to capacity cuts to adjust to rough economic times
20 July 2009

Like most businesses, airlines want to grow. But during these difficult economic times, their survival depends on their ability to shrink, as they try to match how much they fly with the number of travelers willing to pay for a ticket.

Just like Detroit shutting factories rather than building more cars than people want to buy, airlines are reducing the number of available flights to avoid flying empty seats around the sky. That saves them money on fuel and labor costs. Airlines also hope it will tip the supply-and-demand equation back in their favor and allow them to raise fares.

What the industry calls capacity cuts began last year as oil prices spiked. At one point fuel amounted to 40 percent of an airline's costs, said Morningstar equity analyst Basili Alukos, who covers airlines. Cutting flights was one way to reduce that expense.

Last year's fuel prices were the first blow of a one-two punch for airlines. The other has been the recession, which has cut business travel sharply. Airlines rely on business travelers for profits because they generally buy higher-priced last-minute tickets and front-of-the-plane seats.

UBS analyst Kevin Crissey estimates that American Airlines will cut flying by 10.4 percent in August, and that United will fly 6.3 percent fewer seats. The biggest carrier, Delta Air Lines, will reduce capacity by 3.9 percent in August.

Even Southwest Airlines, which has never planned a capacity cut, plans to reduce flying by 6 percent this year.

"After summer I expect most of the major airlines to be more aggressive with capacity cuts, simply because the economics are not working for them right now," said Jim Corridore, an airline analyst at Standard & Poor's.

Here are some questions and answers about capacity cuts.

Q: What is airline capacity, anyway?

A: Capacity is the amount of space available on an airline's flights. Airlines measure it in "available seat miles." That's one seat flown one mile, whether or not someone paid to sit in it. A reduction in seat miles equals less capacity.

Q: How do airlines cut capacity?

A: Two big ways: smaller planes and fewer flights.

Airlines can put smaller planes on a route that used to be served by a bigger jet. Often, this is done by assigning the route to a regional carrier, which can operate anything from propeller-driven planes with a couple of dozen seats to 76-seat regional jets. So maybe the airline keeps just as many flights between two cities, but on a regional jet instead of, say, a 120-seat jet.

Or, they can cut a flight altogether. This has a bigger impact on passengers because a town used to two flights a day might drop to one.

"The airlines have been carefully pruning their own networks to see where they're just not able to make money," Corridore said.

This is tricky in big markets because travelers -- especially lucrative business travelers -- often shop by flight time. So if one carrier drops its 5 p.m. flight from that city, that traveler may fly on a competitor instead.

Some cities without good prospects for profitable routes are being eliminated from the schedule altogether. Moves like that may or may not leave another carrier serving that city.

"So some cities are seeing much fewer choices, and some cities are seeing very little service whatsoever," Corridore said.

Q: What about international flights?

A: International expansion that looked promising just a couple of years ago is now on hold.

Last week Delta won permission from federal regulators to reduce flights, including Atlanta to Moscow and New York to Kiev, from year-round service to seasonal. Delta needed the waiver so it doesn't lose the permission to fly to those cities, which it won under international agreements.

Delta said in a filing with the Transportation Department that it is reducing capacity "primarily through frequency reductions, changes to seasonal service patterns, and by serving certain international cities through fewer hubs."

Q: Is it working? By flying less, have airlines managed to raise fares or become profitable?

A: Profitable? No. And fares are down this year. But it could have been even worse for the airlines.

The International Air Transport Association expects North American airlines to lose $1 billion this year, but notes that those airlines lost $5.1 billion last year in part because of rising fuel prices. The trade group said capacity cuts are one factor preventing airlines from losing even more this year.

Q: Is there anything that limits how much the airlines can cut?

A: Well, parking planes has its costs, too. Even parked planes require some maintenance, and getting them ready to fly again is expensive.

Also, most airlines owe money on their planes, either for loans or leases. Corridore said that as long as they can generate enough money from the plane to cover at least some of those payments, they're often better off flying the plane -- even at a loss -- rather than parking it.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 22nd, 2009, 01:52 PM   #110
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Southwest CEO says worst could be ahead for his airline due to fuel prices, recession
By The Associated Press
21 July 2009

Southwest Airlines Co. has been the most consistently profitable U.S. carrier -- it went more than 17 years without a losing quarter until last year. The company made money in the second quarter this year, but CEO Gary Kelly warned he couldn't promise another profit in the third quarter. He discussed the issue in a conference call with analysts and reporters.

QUESTION: You say you can't guarantee a third-quarter profit. Have you ever had to issue that kind of warning in the past?

RESPONSE: "I've been doing this a long time, I don't remember. But I don't think the worst is behind us; I think the worst is ahead of us, and it's primarily because of increased energy costs at this stage ... September is typically the second-worst month of the year, which means it could be really bad ... With $50 crude oil it's one thing, with $70 crude oil in the third and fourth quarters and next year, those are very high energy prices in a recessionary environment and makes for a very difficult outlook."
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 23rd, 2009, 07:02 PM   #111
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

US Air, JetBlue beat forecasts, but economy weighs
23 July 2009

CHICAGO (Reuters) - US Airways Group and JetBlue Airways reported quarterly net profits that reversed year-ago losses, but economic pressures are curbing travel demand and airline executives said it was unclear when they will abate.

The results complete the second-quarter earnings reports for the biggest U.S. airlines. While they reveal a mostly unprofitable industry trying to ride out a deep recession, some positive signs for the industry have begun to emerge.

"Looking forward to the second half of 2009, the revenue environment continues to be difficult to forecast," US Airways Chief Executive Doug Parker said in a statement.

"We have seen an encouraging, though modest, improvement in revenues over the past several weeks," he said. "But we are not counting on a quick recovery."

Industry watchers now turn their attention to the remainder of 2009, when some airlines are planning new capacity cuts.

"The cash burn is still going to be of concern," said Morningstar analyst Basili Alukos. "And the capacity cuts. Will they continue to cut back? Will there be consolidation? Will someone go under?"

RESULTS

US Airways said its second-quarter net profit amounted to $58 million, or 42 cents per share, compared with a loss of $568 million, or $6.17 per share, a year ago. The profit was driven by lower fuel costs.

Excluding one-time items, the company lost 77 cents per share, which compares with a Wall Street consensus forecast for a loss of 84 cents per share, according to Reuters Estimates.

Shares of US Airways were up 14 cents to $2.19 in late morning trading on the New York Stock Exchange.

US Airways said its bill for fuel and related taxes declined 59.4 percent to $440, but the company reported a realized fuel hedging loss of $135 million.

The carrier said its revenue fell 18.4 percent to $2.66 billion. The company ended the quarter with $2.3 billion in cash and investments.

JetBlue said its net profit for the quarter was $20 million, or 7 cents per share, compared with a loss of $9 million, or 4 cents per share, a year ago.

Excluding an accounting gain from the valuation of some of its auction rate securities, profit would have been 5 cents per share, which compares with a Wall Street consensus forecast for a 1-cent-per-share profit, according to Reuters Estimates.

The carrier's fuel costs were down about $140 million, or 38.6 percent, from a year ago. JetBlue's revenue slipped 6 percent to $807 million. The company ended the quarter with $880 million in cash and equivalents.

The airline said its unit revenue was likely to fall in the second half of 2009, but so were unit costs.

"Despite a challenging revenue outlook, we continue to expect to generate a profit every quarter this year," CEO Dave Barger told analysts on a conference call.

JetBlue shares were 1.1 percent higher to $4.83 on Nasdaq.

"In a somewhat encouraging sign, JetBlue demand expectations appear largely unchanged," JP Morgan airline analyst Jamie Baker said in a research note.

Also Thursday, Alaska Air Group reported second-quarter net income of $29.1 million, or 79 cents per share, compared to a profit of $63.1 million, or $1.74 cents per share, in the year-ago period.

The parent of Alaska Airlines and regional carrier Horizon Air said that excluding special items its income was $26.5 million, or 72 cents per share.

Analysts polled by Reuters Estimates expected a per-share profit, excluding items, of 51 cents. Alaska Air Group shares were up $1.43, or 6.9 percent, to $22.17 on the NYSE.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 23rd, 2009, 09:48 PM   #112
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

WSJ: US Airways CEO Says Consolidation More Likely In Downturn
23 July 2009
Dow Jones News Service

US Airways Group Inc., which reported a surprising second-quarter profit despite fuel-hedging losses, continues to advocate for industry consolidation and believes times of crisis are when airlines tend to combine.

The Tempe, Ariz., carrier, the sixth-largest in the U.S. by traffic, hopes "to see something happen" on that front, though not necessarily for US Airways but the industry at large, said Doug Parker, chairman and chief executive officer, on a conference call to analysts Thursday. But for that to happen "we also need the capital markets to open up," he said.

US Airways, itself the result of a 2005 merger of America West Airlines and the former US Airways, subsequently tried unsuccessfully to interest Delta Air Lines Inc. in a combination and then had talks about a combination with UAL Corp.'s United Airlines, which didn't go anywhere. "Our view of consolidation is well-documented," he said. "We believe it would be helpful to the industry....One day, I believe the planets will align."

Meanwhile, the carrier said it is continuing to focus on its liquidity position. The company raised $234 million in the second quarter, along with securing commitments totaling $700 million to finance all but one of 25 new aircraft to enter its fleet this year. US Airways closed the June quarter with $1.7 billion in unrestricted cash, well above its lending covenant of keeping $850 million of cash on hand. At the end of March, the company had $1.4 million in cash.

Despite the fact that most of the industry expects to see a cash drain in the second half of this year because of weak business travel demand and widespread discounting, "this is not an issue we're going to sit by and watch," Parker said on the call. He disputed industry speculation that US Airways is in worse financial shape than its competitors. "I don't accept that," he said.

The company reported net profit of $58 million, or 42 cents a share, compared with a net loss of $568 million, or $6.17 cents a share, a year earlier. Revenue fell 18.4% to $2.66 billion, on a 5.6% drop in capacity and a 18% decline in unit revenue, the amount taken in for each seat flown a mile.

Excluding one-time items, US Airways had a loss of $95 million in the latest quarter, compared with a loss of $102 million a year ago. One big factor in the discrepancy was a $135 million fuel-hedging loss in the latest quarter, compared with a $192 million fuel-hedging gain a year earlier.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old July 25th, 2009, 07:20 AM   #113
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

American Airlines To Raise US Checked-Bag Fees By $5
24 July 2009
DOW JONES NEWSWIRES

American Airlines, looking to goose revenue in a recessionary environment, plans to raise checked-bag fees on U.S. domestic itineraries by $5.

Airlines have been suffering despite markedly lower fuel prices as business and leisure travel slump. Just last week, American Airlines parent AMR Corp. (AMR) reported a 21% drop in second-quarter revenue although its loss narrowed largely because of year-ago charges.

The fees, first enacted as fuel costs were on their way to record highs, will rise to $20 for the first bag and $30 for the second on tickets bought after Aug. 13. The changes will also affect regional affiliate American Eagle and AmericanConnection flights.

When Continental Airlines Inc. (CAL) released its quarterly results Tuesday, it announced it would introduce new customer charges to boost revenue, including a $5 checked-bag fee for passengers who don't pay online and a $5 hike in its fee for booking by telephone.

AMR shares were recently up 32 cents, or 7.5%, at $4.60 amid a rally for airline stocks. AMR's stock has nearly doubled in value since early March but is still down nearly 67% from their 52-week high of $13.41 nearly a year ago.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old August 4th, 2009, 05:24 PM   #114
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Airlines want tighter limits: Delta, AirTran testify to need for regulations.
Loopholes affect fuel costs, lead to job and flight cuts, carriers say.

4 August 2009
The Atlanta Journal - Constitution

Delta Air Lines and AirTran Airways, the two largest carriers in Atlanta, are renewing their push for stronger regulations to limit oil speculation.

They say such speculation contributes to huge swings in oil prices and financial losses for airlines --- not just when prices go up but also when they plummet and carriers are stuck paying higher prices due to hedging contracts.

Travelers and workers are hurt in the process by flight and job cuts, the airlines say.

The airline industry made a big push for tighter oil speculation regulation a year ago, when oil prices peaked. But the campaign didn't succeed in getting the new regulations it sought, said Air Transport Association spokesman David Castelveter.

Airlines --- which often oppose new regulation of their own industry on matters such as customer service --- want the Commodity Futures Trading Commission and Congress to limit the positions of speculative traders to prevent them from disproportionately controlling commodities markets and close loopholes.

They point to the effects of oil prices on consumers' costs at the gas pump and for heating and air conditioning.

Airlines are cutting flights and jobs, making moves "they otherwise wouldn't have done if not for oil price volatility," Castelveter said.

Generating much grassroots support may be more challenging when oil prices are far below the high of around $147 a barrel of last summer.

Delta general counsel Ben Hirst testified in support of tougher regulation of the oil futures market at a hearing by the Commodity Futures Trading Commission last week. It was one of three hearings being held by the commission, whose chairman Gary Gensler said, "there are significant gaps in our financial regulatory system." The final hearing is scheduled for Wednesday.

Representing the Air Transport Association, a major airline industry lobbying group, Hirst told the commission that the airline industry "has been devastated in the past two years by the high price of fuel and volatility in oil markets," which have "destroyed some airlines and deeply damaged the rest."

Fuel is typically an airline's single largest expense, equivalent to about 40 percent of revenues, he said.

Atlanta-based Delta, like other airlines, suffered when oil prices went up, but also when oil prices went down and it lost $1.7 billion on fuel hedges --- or contracts to buy fuel at preset prices. Hirst said the "oil price bubble" cost Delta $8.4 billion in total since mid-2007, including fuel expense and hedge losses, leading the company to cut flight capacity by 10 percent and eliminate 10,000 jobs.

Castelveter said because airlines plan flight schedules months in advance but don't know if oil prices are headed up or down, "that makes it very difficult to plan."

AirTran, which has its largest hub in Atlanta, last week sent an e-mail message to frequent fliers asking them to contact Congress through the Web site of the Stop Oil Speculation Now coalition organized by the Air Transport Association.

CME Group, which operates major trading exchanges, said in its testimony to the Commodity Futures Trading Commission that limiting speculators' access to the futures markets will impede hedging. But it said it is prepared to respond by administering its own limits.

Jeffrey Sprecher, chief executive of the Atlanta-based IntercontinentalExchange, said in his testimony limits should be set and administered by the commission, rather than by a competitor. He also cautioned that regulations not carefully tailored to address problems can lead to greater price volatility.

Delta's Hirst acknowledged that speculators "play a valuable role by providing the liquidity needed for hedging." He said the commission should "ensure there is enough speculation in the market to provide liquidity, but no more than that."
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old August 7th, 2009, 10:33 AM   #115
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

American Airlines July traffic down 6.4 percent on an 8 percent reduction in capacity
5 August 2009

FORT WORTH, Texas (AP) - American Airlines said Wednesday its traffic dropped 6.4 percent last month despite efforts to scale back its operations to adjust to falling demand.

The carrier, operated by parent company AMR Corp., flew paying passengers 11.66 billion miles in July, compared with 12.46 billion in the same month last year.

It cut capacity by 8 percent, both by scaling back its fleet and directing smaller planes to less-trafficked routes.

Its planes were more full during the month -- occupancy rose 1.4 percentage points to 87.3 percent.

Total passenger numbers were off by 7.3 percent.

So far this year, traffic is down 9.5 percent.

Capacity has been reduced 7.8 percent, while occupancy is down 1.5 percent.

Shares of AMR fell 4 cents to $5.86 in afterhours trading when the report was issued. In the regular session, the stock gained 25 cents to close at $5.90.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old August 21st, 2009, 06:33 AM   #116
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

WSJ: U.S. Airlines Carried 4% Fewer Passengers In July
20 August 2009
Dow Jones

Passenger revenue for U.S. airlines in July fell 21% from the year-earlier month, the ninth consecutive month in which it has declined from the prior year, said the Air Transport Association trade group.

U.S. carriers have been suffering from the recession, which is snuffing demand from leisure passengers and business travelers alike, causing fares to drop as carriers attempt to stimulate demand, and leading the airlines to reduce the number of seats they fly.

Four percent fewer passengers traveled on U.S. carriers in July, while the average price to fly one mile fell 18%, the ATA said. In June, the average price to fly a mile declined by 21% year-over year. While the modest improvement in demand from June to July normally would be a cause for cautious optimism, 'the fact is that the number of air travelers continues to fall despite double-digit declines in fares,' said ATA chief executive James May.

The trade group estimates the number of passengers who will fly globally on U.S. airlines over the Labor Day holiday period this year will fall about 3.5% to 16 million passengers from 17 million in 2008. The ATA defines the period this year as Sept. 2 to Sept. 9.

Also reflecting the weak global economy is the continued decline in cargo traffic. U.S. airlines' cargo traffic, as measured in tons of freight flown a mile, declined 15% in June from the year-earlier month, the ATA said. The decline was 11% domestically and 18% on overseas routes, the 11th consecutive month of declining volumes. July cargo data isn't yet available.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old September 13th, 2009, 06:39 AM   #117
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

Number of flights will fall with autumn leaves as carriers see fewer passenger bookings
12 September 2009

DALLAS (AP) - The U.S. airline industry is shrinking to a size not seen since the months after the 2001 terror attacks.

The airlines have been trimming flights for the past two years, matching the falling demand for air travel. Additional capacity cuts are under way at American, the nation's second-largest carrier, and at No. 3 United.

It could get worse.

Most big airlines depend heavily on a relatively small chunk of passengers who pay the highest fares, "and that's generally business travelers," says Robert Mann, an aviation consultant in Port Washington, N.Y. "If business travel doesn't rebound, we're going to see further (capacity) cuts."

Less capacity means consumers will be left with fewer flights to choose from and planes will be crowded. Fewer seats normally means higher fares but that might not happen this time unless the economy begins a true recovery and passenger traffic picks up.

Airlines measure capacity in "seat miles," the number of miles flown multiplied by the number of seats on the planes. Capacity is crucial in the airline industry in the same way that inventories matter to car dealers and retailers. Too much capacity, and airlines have to cut prices, just as a department store stuck with too many suits and dresses will hold a fire sale. Airlines cut capacity by reducing the number of flights or using smaller planes that carry fewer passengers.

The Air Transport Association, the trade group for big U.S. airlines, estimates that carriers will offer fewer than 12.5 billion seat miles in the U.S. in the fourth quarter. That's not much more than the low of 12.1 billion late in 2001, when airlines were reeling from the Sept. 11 terror attacks, and it's down 13 percent from the fourth quarter of 2000.

After such a steep decline in demand, airline executives and analysts are looking eagerly for any signs of improvement. About the best they can say is that things aren't getting much worse. Airline executives say business traffic is a bit better than it was in the spring but still far behind last year's pace.

David Swierenga, former chief economist for the Air Transport Association and now an airline consultant in Texas, said the decline in demands slows with each passing month.

"The economy has bottomed and is beginning to turn around. Carriers will sit tight and go with the (capacity) cuts they've already made," he says.

Hunter Keay, an analyst for Stifel Nicolaus & Co., also doesn't expect dramatic cuts beyond those already announced. If airlines cut more capacity, he says, it will be on international routes favored by business travelers.

Eventually the economy will recover and airlines will consider adding back service. In past recoveries, airlines added capacity quickly as they scrambled for market share. That created a glut of seats, leading to fare wars and more financial problems.

Aviation consultant Mann said that's because airlines are hooked on growth, which helps them spread out fixed costs.

"They always want to be in a growth mode," he says. "The problem is, you can be in a profitless growth mode too."

Darryl Jenkins, an airline consultant in Virginia, says this recovery will be different because the big carriers have been chastened by overly aggressive growth, high fuel prices and the recession. They've cut costs and don't want to undo those efforts by rushing to add back capacity.

This summer the airlines were busy, but weak fall bookings led them to offer deeply discounted fares to fill seats normally taken by business travelers. Southwest ran a sale with some seats as cheap as $30 each way on some routes.

Rick Seaney, the CEO of FareCompare.com, thinks the best of the fall sales are over. With airlines cutting capacity, and having sold many fall seats during the recent promotions, planes will be crowded.

"I can't imagine we'll see anything but firm pricing," Seaney said. "There are still some $99 coast-to-coast deals occasionally, but it's much more random."

During the recession, low-fare airlines such as JetBlue, AirTran and Southwest have done better than their bigger rivals. The discounters set the prices on many routes, and the network carriers generally match them.

Even Southwest, however, is shrinking about 6 percent this year, and has announced a slightly scaled-back schedule for early 2010.

Bill Owen, Southwest's chief scheduler, says the airline has been trimming unprofitable routes, but "If it's full of full-fare business travelers, we're not about to cut that flight."

JetBlue is bucking the industrywide contraction and will add capacity in the second half of the year. The New York-based airline caters to U.S. leisure travelers and has avoided the meltdown in international business travel. It picks targets for growth carefully -- it's expanding in the Caribbean while shrinking on cross-country U.S. routes.

In setting capacity, JetBlue of course studies its own traffic but also keeps an eye on what competitors are doing. Robin Hayes, JetBlue's chief commercial officer, insists that the airline doesn't try to forecast the economy.

"These are plans we put in place back in the spring," he says of the expansion now taking place. "We take a long-term view, and we don't try to guess when the recession will end."
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old September 13th, 2009, 06:39 AM   #118
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

A look at airline capacity cuts
By The Associated Press
12 September 2009

Most major U.S. airlines plan to offer fewer flights this fall than they did a year ago as they adjust to weak demand.

Here's a look at recent announcements from the carriers, who are listed in descending order of size based on capacity in August. The figures include both "mainline" and regional affiliates for each company.

Passenger-carrying capacity is measured in "available seat miles" or ASMs -- miles flown times seats on the planes. A 150-seat jet flying 100 miles (160 kilometers) equals 15,000 available seat miles.

-- Delta Air Lines Inc. (21.6 billion ASMs in August, down 3.2 percent from August 2008): Said in July that third-quarter capacity would be 4 percent to 5 percent less than a year earlier, with deeper cuts in international flying than domestic routes. Mainline capacity on Delta will be lower by between 5 percent and 7 percent.

-- American Airlines parent AMR Corp. (14.1 billion ASMs, down 9.2 percent): Said in July that third-quarter capacity would be 8.5 percent less than a year earlier, with the cuts 10.5 percent on domestic routes.

-- United parent UAL Corp. (12.8 billion ASMs, down 6.2 percent): United says it will cut international capacity an additional 7 percent in the last four months of this year. The company had previously said mainline capacity -- excluding regional affiliates -- would fall by between 9 percent and 10 percent for the year.

-- Continental Airlines Inc. (10.2 billion ASMs, down 6 percent): Estimates third-quarter capacity will be down 5.1 percent from a year ago, with deeper cuts on domestic routes. Mainline capacity will shrink 4.7 percent.

-- Southwest Airlines Co. (8.3 billion ASMs, down 6.1 percent): Said in July that capacity for the full year would be 5 percent to 6 percent lower than 2008. The decline is expected to be 6 percent in the third quarter, 8 percent in the fourth compared to the same quarters in 2008.

-- US Airways Group Inc. (6.7 billion ASMs, down 3.9 percent): For all of 2009, capacity will be down between 4 percent and 6 percent compared to 2008.

-- JetBlue Airways Corp. (3 billion ASMs, up 0.6 percent): In contrast to bigger carriers, expects an increase in third-quarter capacity of between 1 percent and 3 percent from a year earlier. Fourth-quarter capacity is expected to be up between 3 percent and 5 percent over a year earlier.

Source: Company officials, press releases
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old September 19th, 2009, 02:21 PM   #119
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

ANALYSIS-U.S. airlines to fare better than global carriers

NEW YORK, Sept 18 (Reuters) - U.S. airlines are expected to fare better than most of their foreign counterparts this year because they are trimming unprofitable routes and beefing up balance sheets as the economy begins to rebound.

U.S.-based carriers have been cutting capacity since last year in response to surging oil prices, while most European and Asian carriers have been slower to reduce flights or fly smaller aircraft on their routes.

In the fourth quarter, domestic capacity is expected to fall to levels unseen since after the Sept. 11 attacks, when airlines saw air travel demand crumble, according to the Air Transport Association.

With fewer seats for sale, airlines could begin to raise fares and draw more revenue, especially as an appetite for travel returns.

"The U.S. airlines have done so much more than the international airlines to improve their own outlook," said Helane Becker, an analyst with Jesup & Lamont Securities.

"Those guys are just cutting capacity now," she added, referring to European carriers. "They're almost a year later than U.S. airlines."

U.S. airlines could still end 2009 in the red, experts warned. Industry executives and analysts say this year is among the industry's worst.

But this week, Continental Airlines Inc said declines in its "high-yield" or premium traffic, a good proxy for higher-margin tickets such as business and first-class, were beginning to slow and Delta Air Lines Inc and UAL Corp's United Airlines said costs were falling due to lower fuel prices.

Stifel Nicolaus said in a note on Friday that Continental could be profitable in the third quarter. Other analysts say carriers could report lower third-quarter losses than previously expected.

Many analysts now expect losses at U.S. carriers to be less steep than those of foreign rivals.

The Arca Airline Index <.XAL> has jumped 23 percent this month on signals of improved demand and September so far is the index's best month since July 2008.

CUTTING CAPACITY, RAISING LIQUIDITY

U.S. carriers have cut domestic capacity 12 percent in the past two years in response to the spike in oil prices last year and the drop-off in consumer spending this year, ATA data shows.

Airlines have cut jobs, wages and introduced early- retirement options for some employees, similar measures were used to cut costs after the Sept. 11 attacks.

North American airlines are expected to lose $2.6 billion this year, much narrower than the $9.5 billion they lost in 2008 when they were among the first to feel the pinch of the recession.

European carriers, on the other hand, are expected to lose $3.8 billion.

U.S. carriers' heavy reliance on domestic traffic rather than international business has also helped them as the global recession hurt international travel a more, analysts said.

U.S. airlines are now also seeking ways to drum up cash. United said it had liquidity initiatives on tap for the fourth quarter and Continental announced a stock sale last month. AMR Corp's American Airlines said on Thursday that it raised $2.9 billion in cash and financing and would focus on more profitable routes.

The U.S.-based industry may also be cutting capacity another 3 percent to 5 percent, with more cuts coming from the international side, said Morningstar analyst Basili Alukos.

"The domestic market is in a better situation and I think more in equilibrium with supply and demand," Alukos added.
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote
Old October 17th, 2009, 08:24 AM   #120
hkskyline
Hong Kong
 
hkskyline's Avatar
 
Join Date: Sep 2002
Posts: 86,891
Likes (Received): 18168

New airline fees a gold mine for U.S. carriers

CHICAGO, Oct 16 (Reuters) - The U.S. airline industry, finally poised for rebound after a near financial meltdown in 2008, may owe its survival to the creative minds who brought you fees, fees and more fees.

The charges are a mixed blessing for airline passengers who resent paying for formerly complimentary services like bag checks, but who like the option to pay for in-flight Internet access, extra legroom or express check-in. For airlines, such charges are a gold mine with unlimited potential.

"You're seeing more and more airlines adopt this. Nominally full-service airlines see this as a key part of their profitability now," said Andrew Watterson, an airline consultant at Oliver Wyman, a management consulting company.

Sales of ancillary goods and services by airlines enable them to squeeze more money out of their customers while keeping fares competitive. The strategy has paid off for U.S. carriers that have struggled for stability amid volatile fuel prices, fare competition and recession.

American Airlines, a unit of AMR Corp , lists its ancillary revenue as "other revenues" on its quarterly earnings statement. That figure, which rose 7 percent for the first six months of 2009 versus a year ago, includes service charges as well as other items such as maintenance revenue.

UAL Corp , parent of United Airlines, said that in the first quarter of 2009, ancillary revenue and fees increased to $259 million. These revenues consist of various optional products, as well as ticket change fees and bag check fees.

Ancillary revenues and fees increased by about 60 percent in the first quarter at UAL to about $14 per passenger.

"They've certainly created more ways for passengers to spend money," said Terry Trippler at tripplersview.com, a travel opinion website. "But we do have to draw a line."

CHANGING THE WAY PLANES ARE MADE

The new reliance by U.S. carriers on ancillary revenue will change the way airplanes are made, said Colleen Rainbolt, a director in Boeing Co's Passenger Satisfaction and Revenue department of the commercial airplanes division.

Rainbolt said the key is to design the interior of an airplane with passenger comfort in mind and make many of the features optional so that airlines can charge for the options they deem appropriate.

"It really depends on how an airline wants to use a cabin in order to maximize their own revenue," she said.

Nowhere is this budding trend more evident than on Boeing's 787 Dreamliner, which is scheduled for its first flight this year. The company put a much greater emphasis on passenger comforts for this aircraft -- adding perks such as big windows, electronic window shades and large overhead bins.

Boeing has made the cabin especially flexible so airlines have ways to upgrade a passenger's service in smaller increments than traditional leaps from economy class to business class to first class. Potentially a passenger could pay more to sit in a section with more leg room that does not feature the perks of business class.

Rainbolt noted that the recession has eroded the number of business travelers willing to pay for expensive business class seats.

"The problem for airlines is that many of them earn a significant portion of their revenue through their business class cabin," she said. "So having passengers fall back from business class into economy -- from a revenue perspective -- is not necessarily a good idea."
__________________
Hong Kong Photo Gallery - Click Here for the Hong Kong Galleries

World Photo Gallery - | St. Petersburg, Russia | Pyongyang | Tokyo | Istanbul | Dubai | Shanghai | Mumbai | Bangkok | Sydney

New York, London, Prague, Iceland, Rocky Mountains, Angkor Wat, Sri Lanka, Poland, Myanmar, and much more!
hkskyline no está en línea   Reply With Quote


Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Related topics on SkyscraperCity


All times are GMT +2. The time now is 02:19 PM.


Powered by vBulletin® Version 3.8.11 Beta 4
Copyright ©2000 - 2018, vBulletin Solutions Inc.
Feedback Buttons provided by Advanced Post Thanks / Like (Pro) - vBulletin Mods & Addons Copyright © 2018 DragonByte Technologies Ltd.

vBulletin Optimisation provided by vB Optimise (Pro) - vBulletin Mods & Addons Copyright © 2018 DragonByte Technologies Ltd.

SkyscraperCity ☆ In Urbanity We trust ☆ about us | privacy policy | DMCA policy

tech management by Sysprosium