USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
2005 Airline Losses May Triple Past Estimates
- Thread starter USA320Pilot
- Start date
goingboeing
Veteran
- Jan 30, 2004
- 584
- 1
USA320Pilot said:
The management at ALL legacy carriers need to get off their dead _ _ _ and really get serious about fixing their airline.AND MORE CONCESSIONS IS NOT THE FIX!
Airline restructuring and improved productivity has to happen for legacy airlines to survive in today's airline market.
There are always going to be outside forces that have an effect on the airlines in which airline management has no control over.The management needs to get their own houses in order and stop blaming everything else for the problems plauging the legacy airlines.
Plain and simple. Capacity has to come out of the system. Until prices come up to reasonable levels comensurate with fuel, it's going to be a losing industry. It's simple supply and demand. The USA has WAY more airline industry than it should have. There is no way that an industry that requires so much capital can adjust to wild swings in demand or fuel prices, yet have no pricing power. The industry is deflating because of the excess capacity. And the government through sweetheart deals with the ATSB, just keeps that excess capacity further driving down prices. With oil likely to stay well above $45 a barrel, the losses next year are going to make this year look like chump change. If a cherry-picker like JB can't eek out a profit last quarter, then the network airlines don't have a prayer.
I agree that 2005 is likely to break the proverbial camel's back of the industry. It's hard to imagine an industry full of airlines in the same pathetic condition that U and UAL find themselves now. Sooner or later the weak and incompetent are going to have to be allowed to fail. Unfortunately, the survivors are likely to be crawling wounded when it's all over.
This is what happens when there is no national policy. The Bush administration has no airline industry strategy, like it has no Iraq strategy . . . . just hoping that if they run the deficit up high enough, everything will be ok.
U and UAL's capacity need to come out of the system as the Typhoid Mary's of the industry.
I'm seriously worried that the airline industry, our economy, and indeed our country are in for a train wreck you won't believe . . . . . and not in the distant future.
I agree that 2005 is likely to break the proverbial camel's back of the industry. It's hard to imagine an industry full of airlines in the same pathetic condition that U and UAL find themselves now. Sooner or later the weak and incompetent are going to have to be allowed to fail. Unfortunately, the survivors are likely to be crawling wounded when it's all over.
This is what happens when there is no national policy. The Bush administration has no airline industry strategy, like it has no Iraq strategy . . . . just hoping that if they run the deficit up high enough, everything will be ok.
U and UAL's capacity need to come out of the system as the Typhoid Mary's of the industry.
I'm seriously worried that the airline industry, our economy, and indeed our country are in for a train wreck you won't believe . . . . . and not in the distant future.
Just because you keep repeating it, doesn't mean it will happen. Continental had 3 bk's and look at them now. Bankruptcy law is established and I can assure you, no airline is going to roll over so that you can be allowed to better your career. Not the way it works. Airlines always die a sloooooow long death. Perhaps AA should come up with a plan instead of hoping for the death of a competitor.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
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- Banned
- #5
Fly,
Just for the record, CAL had 2 bankruptcies and they are the lone lone airline that has survived being in BK twice - maybe U will be the second, maybe not.
As for a plan, there could be one (farfetched as it is) and it involves USA320Pilot's "corporate combination" theory. For $100 million or so, someone could buy U lock, stock, and barrel and pay about a 50% premium to current stock price. Cherry pick some assets, pay off the ATSB, and convert the BK to chapter 7. Instant capacity reduction in the industry.
Obviously an outside investor probably wouldn't do that, though it would depend on what they thought the assets were worth vs the debt that had to be paid. But an airline with plenty of cash in it's pocket? That's the more interesting possibility. There are a couple or three of them out there, and if the result was being able to raise fares by $5 or $10 per ticket, the return on investment looks pretty good.
Jim
ps - change UAL for U and the cost would be about $200 million, but the theory still holds.
Just for the record, CAL had 2 bankruptcies and they are the lone lone airline that has survived being in BK twice - maybe U will be the second, maybe not.
As for a plan, there could be one (farfetched as it is) and it involves USA320Pilot's "corporate combination" theory. For $100 million or so, someone could buy U lock, stock, and barrel and pay about a 50% premium to current stock price. Cherry pick some assets, pay off the ATSB, and convert the BK to chapter 7. Instant capacity reduction in the industry.
Obviously an outside investor probably wouldn't do that, though it would depend on what they thought the assets were worth vs the debt that had to be paid. But an airline with plenty of cash in it's pocket? That's the more interesting possibility. There are a couple or three of them out there, and if the result was being able to raise fares by $5 or $10 per ticket, the return on investment looks pretty good.
Jim
ps - change UAL for U and the cost would be about $200 million, but the theory still holds.
