April Financial Report Filed With Court

[BoeingBoy]

U filed it's monthly financial report for April with the BK court today. It's not on the usual website yet, but is on USAirways.com.

This is the pdf version:

April Financial Report (pdf)

and the html version:

April Financial Report (html)

Short version:

Operating Revenues of nearly$642 million
Operating Expenses of nearly $635 million
Operating Profit $7 million

Other Income was a loss of nearly $38 million
Net loss of nearly $31 million

Unrestricted Cash of nearly $536 million (up $23 million from March thanks to the $25 million from Air Wisconsin)

Good news:

Passenger revenue was second only to March since monthly reports have been filed (and since March had 1 more day, the difference is less than one would expect)

Sorta Good, Sorta bad news:

Employee costs continue to drop (good for bottom line, not good for employees)

Bad news (or expected news):

Fuel costs were up $8 million from March, even though there was 1 less day in the month and airplanes were parked during April.

Jim

 

[justaumechanic]

No debt service in that operating expense. Thats why the numbers look magical.

Still a loss of 31 million for the month.. Thats not good.

US Airways still not servicing debt.. The cash position is nil because that is ATSB money not actual dollars.

 

[totobird]

This is very disturbing news. Another 30 million dollar net loss for the month of April. Not to mention fuel prices are once again rising. Closing in on $52 today. With Jet Blue possibly arriving in PIT later this year and SouthWest already here I have to wonder how long before PIT is pulled down once again and aircraft are repositioned along the East coast.

 

[USA320Pilot]

US Airways still losing money

CHARLOTTE (Observer) - US Airways continued losing money in April, posting a $30.6 million net loss for the month, the airline said in a bankruptcy filing Thursday.

The airline turned an operating profit of $7 million, but that figure swung to a net loss after the company factored in costs related to its bankruptcy restructuring and interest expenses. The amount of cash on hand increased to $536 million -- about $200 million more than the carrier was required to have to satisfy conditions of a federally backed loan.

See Story

USA320Pilot comments: US Airways or any other carrier cannot run from the LCC's who are adding about 500 aircraft to their fleets. US Airways and every other airline must be able to compete across-the-board, including costs, to be profitable over the long-term, thus it does not matter where JetBlue, Southwest, or AirTran fly.

Part of the motivation to increase the new US Airways' liquidity to a high number is to provide a cushion while the combined business averages down unit costs to at least 7.3 cents (adjusted for stage length) with an objective to make money with Crude Oil prices at $50 per barrel.

Will the new US Airways and every other network carrier need to further lower unit costs? Absolutely and it will happen.

Regards,

USA320Pilot

 

[FWAAA]

With those LCCs adding about 500 airplanes to their fleets, something's gotta give. Either USAir or UAL or AA or DL or NW or CO or some combination of them needs to draw down about 500 airplanes worth of capacity. Either that or the LCCs need to do it, and that's really unlikely.

Or the legacy carriers can just keep up the beatings of their beleaguered staff and their customers (like keep cutting out free pretzels (NW announced this today)) in a futile attempt to bring costs down.

The domestic market suffers from overcapacity, and that has to change. Or else the beatings will continue.

 

[Dog Wonder]

How much money can you lose before it isn't a good thing?

 

[USA320Pilot]

Virtually every airline analyst and CEO's from companies like AA & NW repeatedly indicate that the industry has over capacity, but what has top be asked is what is causing the over capacity.

It's the LCCs because of their expansion. If the LCCs would not grow network companies would have better pricing power.

With that said, legacy airlines must be able to compete across-the-board to fight off the LCC advantage. If the legacy companies can compete, LCC expansion will slow.

Regards,

USA320Pilot

 

[aafsc]

With those LCCs adding about 500 airplanes to their fleets, something's gotta give. Either USAir or UAL or AA or DL or NW or CO or some combination of them needs to draw down about 500 airplanes worth of capacity. Either that or the LCCs need to do it, and that's really unlikely.

Or the legacy carriers can just keep up the beatings of their beleaguered staff and their customers (like keep cutting out free pretzels (NW announced this today)) in a futile attempt to bring costs down.

The domestic market suffers from overcapacity, and that has to change. Or else the beatings will continue.

[post="273610"][/post]​

I know it is illegal for the airlines to get together and talk about price. But would it be illegal for all of them to get together and cut capacity? Each one of the big six agree to dump 80 aircraft.

 

[tadjr]

Each one of the big six agree to dump 80 aircraft.

[post="273759"][/post]​

That would last about a day. Someone, somewhere, would blink and it would start all over again. They cant even get a $10 fare hike to stick most days, you think AA/NW/DL are going to agree to dropping 80 planes? US is well on their way to achieving those numbers though.

 

[BoeingBoy]

From my perspective, the "overcapacity" is media reporting at it's finest - the sound bite becoming the story.

With most airlines running at or near record load factors it's hard to say that there's overcapacity in general.

The problem really is an overcapicity of high-cost seats chasing passengers with low fares. The fares are low because the LCC's can make money at those prices and thus "set the fares".

If the LCC's cancelled every airplane order tomorrow, the fares would continue to remain low because they can make money at those fares. Eventually, rising traffic volumn and LCC costs (growth plays a role in keeping costs down) would put upward pressure on fares because the LCC's would run out of capacity to handle the traffic, but that would be some time out in the future.

However, if some high-cost capacity were to disappear, that remaining would see an increase in the percentage of higher fare traffic - that traffic wouldn't disappear - thus increasing average fares while still competing for the low-fare traffic. Everyone would be better off, legacy and LCC alike.

Jim

 

[javaboy]

continuation of the overcapacity line of thought....................................




actually one of THE most vocal proponents of the overcapacity theory is SWA. it almost is humorous (if not for the seriousness for the airline industry professionals that go to work each day) where the one complaining the loudest in public is actually the one that is THE CAUSE of most of the overcapacity. of the 10 largest airlines SWA has the LOWEST LOAD FACTOR and is generating (domestically) just about the most ASMs. and we are not just talking a few points. look at Mar and or April's numbers. MOST carriers ran in north of 80% load factors some even in the low 90s but SWA ran in the LOW 60s%. thats right all those quick turns are putting alot of seats in the air thus increasing thier ASMs dramatically, which of course reduces the CSMS by virutue of simply changing the top numerator. and as well CREATING OVERCAPACITY. SWA needs to "right size" yep thats right you heard it here first. predictions for SWA include the following from me. As fuel hedges run out operational profits will feel the squeeze, Parker will approach the collective group for "sacrifices" (could that be paycuts? or layoffs? i suspect they will do everything to avoid layoffs, i look for reduction in salaries as the alternative). SWA now to grab more premium pricing is attempting to have the Wright Amendment Repealed, which of course was enacted to essentially protect SWA.

 

[WorldTraveler]

but SWA realizes that the legacy carriers cannot continue to operate the way they are - borrowing money, cutting employee salaries, etc. SWA is well positioned to turn those low load factors into very high load factors very quickly should someone fail. They are extremely opportunistic and happen to be gunning at US most heavily because they see them as most vulnerable. It doesn't help that US has a pretty long track record of running from LCC competition.

 

[Walmartgreeter]

They are extremely opportunistic and happen to be gunning at US most heavily because they see them as most vulnerable.

Ahhh, the big problem here is, and even DAL is guilty of this, is having a business plan that COUNTS on U going out of business! Ooops! But your point is well taken, U's track record would make even Don Knotts proud! Best. Greeter.

 

[BoeingBoy]

SWA now to grab more premium pricing is attempting to have the Wright Amendment Repealed, which of course was enacted to essentially protect SWA.

[post="273933"][/post]​

Well, not quite....

The Wright amendment didn't prevent any carrier from serving Love Field, it prevented Love field from having flights beyond Texas and the adjoining states.

The Airline Deregulation Act of 1979 gave any carrier the ability to serve any airport from any other airport. The Wright amendment added "except Love Field" as a means of protecting DFW and it's largest tenent, American Airlines.

Jim

 

[ClueByFour]

It's the LCCs because of their expansion. If the LCCs would not grow network companies would have better pricing power.

[post="273756"][/post]​

The reason for the explosive LCC growth in the last 10 years is due directly to the network airlines exercise of "pricing power."