Airlines Seen Headed for Big Loss

[chipmunn]

Airlines Seen Headed for Big Loss
LONDON (Reuters) - The world's airlines are headed for a combined loss of $5-7 billion on international routes this year as the ripples of economic slowdown and September 11 spread across the industry, a top airline group said on Tuesday.
The International Air Transport Association (IATA) had previously forecast losses on international scheduled flights in a $3-7 billion range but data from its members, the airlines, now led to pessimism, the group's chief economist Peter Morris said.
A slowing world economy has led to deep cuts in corporate spending and a sharp drop in business travel. The September 11, 2001, attacks in the United States scared off many travelers and has particularly hurt business on key transatlantic routes.
This year we are seeing something like a $5-7 billion loss on international scheduled services but this is very heavily weighted toward North American carriers, Morris told an air industry conference in London.
It's possible that there could be a recovery next year, something like a very small surplus, he said, pencilling in a figure of around $2 billion after interest payments.
Facing their worst crisis since the Gulf War a decade ago, airlines have slashed jobs and routes. Some carriers have gone under. IATA has said that the possibility of a war in Iraq poses a major threat to the industry's recovery.

 

[chipmunn]

Is management responsible for the global economic slowdown?

Chip

 

[LGA Fleet Service]

[BR][BR][BR]
[BLOCKQUOTE][BR]----------------[BR]On 11/19/2002 11:53:28 AM chipmunn wrote: [BR][BR]Is management responsible for the global economic slowdown?[BR][BR]Chip----------------[BR][BR][BR][FONT size=4][BR][/FONT][SPAN class=t]Lufthansa Profit Rises Sharply[/SPAN][BR][SPAN class=tt]Wednesday November 6, 3:35 pm ET[/SPAN] [BR][BR][BR]
[DIV class=ar]FRANKFURT, Germany (AP) -- Germany's Lufthansa on Wednesday reported a sharp increase in net profit for the first nine months of this year and said it already has exceeded its target for full-year operating profit as its recovers from the airline industry's post-Sept. 11 slump.[BR][BR][BR][BR][BR][BR][FONT size=4][STRONG][FONT size=5][/FONT][/STRONG][BR][/FONT][SPAN class=t]British Airways Reports Profits Up[/SPAN][BR][SPAN class=tt]Tuesday November 5, 11:04 am ET[/SPAN] [BR][BR][BR]
[DIV class=ar]LONDON (AP) -- British Airways reported a strong increase in second-quarter profits Tuesday, signaling that its sharp cutbacks were taking effect, but said sales and passenger numbers had both slipped.[BR][BR][BR][BR]Air France Q2 profits bounce back[/DIV][BR][BR]
[DIV class=ar][/DIV][BR][BR]
[DIV class=ar]PARIS, Nov 18 (Reuters) - Air France posted an 85.5 percent rise in second-quarter operating profits on Monday as it bounced back from the depressed levels seen last year in the wake of the September 11 U.S. attacks. One of Europe's most profitable airlines, Air France said earnings before interest, tax and aircraft sales totalled 141 million euros for the three months to end-September, up from 76 million euros in the same quarter last year.[/DIV][BR][BR]
[DIV class=ar]That was at the higher end of forecasts, which had predicted core earnings of between 100 and 150 million euros.[/DIV][BR][BR]
[DIV class=ar][BR][BR][/DIV][/DIV][/BLOCKQUOTE][BR][BR] [BR] [BR]

 

[chipmunn]

LGAFleetService:

You're right about the European carriers, who do not have to contend with low cost competitors with the strength of Southwest, JetBlue, AirTran, and Spirit business models. Would you comment and discuss the study presented on the cover of this week's Aviation Week & Space Technology?

Chip

 

[LGA Fleet Service]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/19/2002 12:29:54 PM chipmunn wrote:
[P]LGAFleetService:[BR][BR]You're right about the European carriers, who do not have to contend with low cost competitors with the strength of Southwest, JetBlue, AirTran, and Spirit business models. Would you comment and discuss the study presented on the cover of this week's Aviation Week & Space Technology?[BR][BR]Chip[/P]----------------[/BLOCKQUOTE]
[P][/P][BR] European carriers do indeed have to contend with low cost carriers,Easyjet and Ryanair are putting a dent into the established carriers on the continent(KLM and British Airways in particular), and one could say that they are indeed as strong as Southwest and jetblue are in the United States.[BR][BR]As far as AW&ST goes, that is a rehash of what the Experten have been parroting for the last 14 months.[BR][BR][BR]The hub and spoke system can still work, just not in its present massed bank incarnation.[BR]Depeaking the hub, much like what we have already done in ORD and just started in DFW relieves the bottle neck on the taxi ways and also eliminates the lull between banks that is the hallmark of every hub.[BR][BR]Having a steady flow of flights as opposed to Tidal Waves of arrivals and departutres keeps people productive, reduces delays and misconnects and in general smoothes out the operation.[BR][BR][BR]As I have said before, the name of the game now is adapt or die.[BR][BR]Those that adapt will survive, those that dont will die.[BR][BR]

 

[usfliboi]

Management isnt responsible for the slow down but boi they sure do have to bear the burden of many of their mistakes !!!!

 

[UAL777flyer]

Chip,

You mean NOT YET. It's only a matter of time before low cost competition starts to rear its' ugly head in international travel. As barriers to entry are removed, it will become easier for low-cost carriers to carve out a niche for themselves in this area.

 

[BillLumbergh]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/19/2002 11:52:21 AM chipmunn wrote:
[P][SPAN class=BodyFont][STRONG]Airlines head for bigger losses[BR][BR][/STRONG]LONDON (BBC News Online) - The world's airlines are heading for heavier losses than expected this year. [BR][BR]The international airline group, IATA, said its members would lose up to $7bn (£4.4bn) on their international operations. [BR][BR][STRONG]North American carriers would be worst hit.[/STRONG] [BR][BR]In September IATA estimated that its members would lose between $3bn and $7bn, but it has now narrowed that figure to between $5bn and $7bn. [BR][BR]Problems within the US [BR][BR]The group's chief economist Peter Morris told an industry conference that the latest data from its members had painted a more pessimistic picture. [BR][BR]William Gaillard, IATA's director of communications, told BBC News Online that the [STRONG]bulk of the losses would be borne by US airlines.[/STRONG] [BR][BR]In the US it's slightly worse than what we thought previously, at the same time the situation in Asia-Pacific and Europe is better. [BR][BR]He said that, domestically, US airlines would lose a further $8bn this year. [BR][BR]And the US carriers were unlikely to make a profit before 2004. [BR][BR]This week United Airlines said it was cutting a further 9,000 jobs to cut costs and try to stave off bankruptcy. [BR][BR]Better shape [BR][BR]Mr Gaillard said that European and Asian airlines had come out of the aviation crisis caused by a downturn in the industry and the effects of the September 11 terrorist attacks. [BR][BR]He said that, since the threat of war with Iraq had receded, the industry looked in better shape. [BR][BR][STRONG]But at the same time we're not really seeing any signs that the US market is picking up, he added.[/STRONG] [BR][BR][/SPAN]----------------[/P][/BLOCKQUOTE]
[P][/P]

 

[W:EXCH:INVOL]

[blockquote]
----------------
On 11/19/2002 11:53:28 AM chipmunn wrote:

Is management responsible for the global economic slowdown?

Chip
----------------
[/blockquote]


Is labor?

INVOL

 

[cat 111]

Maybe,Usair should bring Wolf and Gangwal back to turn things around !!!

 

[TBONEJ4J]

You're right about the European carriers, who do not have to contend with low cost competitors with the strength of Southwest, JetBlue, AirTran, and Spirit business models.

Chip.


Quite the contrary Chip. Have you ever heard of RYANAIR, or EASYJET, to name just two. The major European carriers certainly do contend with significant low-cost competition, yet they still manage to turn a profit without constantly pounding on Labor's door.

I like to think that it's because historically, in Europe, no matter whether you fly a Cessna 152 or a B747-400 for a particular airline, you must be on the pilot seniority list of that airline. Absolutely no such thing as affiliate contract carriers, therefore no 'Whipsaw' .

When an Airline is not cannibalising itself, it can actually meet the competition of the low-cost carrier, and succeed. It's not rocket science and it doesn't involve shoving the face of labor into the ground over and over again.

Apart from the obvious economic problems in the industry, perhaps the turmoil (especially at US Airways) is being leveraged to divert flying to the low-cost, i.e.low-paid, jobs at Mesa, Freedom, etc. There is more to this than meets the eye.