Big US airlines fly fewer planes, stage recovery

[Midnight Mike]

Good, it is about time that the airlines learn how to run a business, you can't always keep looking at your competition to the detriment of putting your own company out of business. Unions have got to realize, that the airlines can only pay so much, & it may not match what union members think they are worth.

Another problem is that due to high loads, airline employees are having trouble travelling on passes, would not be surprised in the future, if airline employees waive their rights to passes, in return for wage increases.


After doggedly pursuing market share at any cost, the big carriers are now focusing on the profitability of each route and flight, the Journal said.


The legacy carriers are increasingly unwilling to fly half-empty aircraft for the sake of feeding their nationwide networks to stay competitive, the newspaper said.

Big US airlines fly fewer planes, stage recovery-WSJ
Mon Jun 5, 1:00 AM ET


The six largest U.S. airlines, hammered by five years of brutal losses, have streamlined their fleets and are flying far fewer planes, helping them stage a recovery as they focus on profitability, The Wall Street Journal report on Monday.

Improving financial results posted by seven of the 10 big U.S. carriers in recent months reflects a fundamental shift in strategy that goes beyond trying to wrest concessions from airlines' unions, the newspaper reported.

After doggedly pursuing market share at any cost, the big carriers are now focusing on the profitability of each route and flight, the Journal said.

The so-called legacy airlines -- AMR Corp.'s (NYSE:AMR - news), Continental Airlines (NYSE:CAL - news), Delta Air Lines Inc. (Other OTC:DALRQ - news), UAL Corp. (Nasdaq:UAUA - news), Northwest Airlines Corp. (Other OTC:NWACQ - news) and US Airways Group Inc. (NYSE:LCC - news) -- have abandoned many of the tactics that weakened them.

The legacy carriers are increasingly unwilling to fly half-empty aircraft for the sake of feeding their nationwide networks to stay competitive, the newspaper said.

UAL Corp. emerged from bankruptcy four months ago, while Delta and Northwest are restructuring under Chapter 11 protection from creditors. US Airways was formed last year by a merger of bankrupt US Airways and America West Airlines.

New statistics for 2005 show the legacy carriers' combined fleet was 2,747 aircraft, down 21 percent from 3,469 at the end of 2000, according to Air Transport Association data.

With the cuts in capacity and strong demand, the big carriers are enjoying the strongest pricing power in five years, and for the first time are passing on a substantial share of high fuel costs to customers, the Journal said.

Last year, U.S. airlines filled an average 77.6 percent of their domestic and overseas flights -- the highest level since 1946 -- up from 75.5 percent in 2004, according to the ATA.

The association's chief economist predicts the percentage will rise to about 85 percent this summer, potentially the highest ever recorded, it said.

[T-Bird76]

I'm sorry but this has to be one of the worst articles I've seen about the industry... First off airlines have been cutting fleet size since 2001 not just in the last year. They've done so that if you add up the amount of reductions that have taken place it would equal a fleet size as big as CO's. This is not new information it’s old.

As far as the airlines flying to fewer places, BULL****. While mainline might not be flying to Podunk anymore a contract carrier with their colors are most certainly flying to Armpit, Iowa. In fact service to secondary destinations is growing in many areas of the country. Just because AA, UAL or CO big jets don't fly there doesn't mean contract carriers aren't. The airlines are not flying to fewer domestic destinations as this article points out.


After doggedly pursuing market share at any cost, the big carriers are now focusing on the profitability of each route and flight, the Journal said.

I'm going to try not to laugh too hard with this statement. I'm glad the airlines finally woke up and said "hmmm lets make some money." The airlines have ALWAYS been focused on making a profit. They are public companies, what shareholder is going to sit back and accept a company not focused on making money.

WSJ is generally a good paper but this article is a total waste of ink.

[Alex T]

Maybe I am totally wrong on thinking this, but as they also want to differate from the business flights to the leisure, they should add huge planes for the vacation cities and less freqeuncies.

AA is doing this at STL, flights that are leisure, get big planes, flights that are business gets freqeuncies/smaller planes.

and it has worked tremendously for AA and STL is now 97% full for AA and extremely profitable.

SWA learned how to do this too with their 737's.

Other airlines should try it out with their hubs and routes and see.

Again I could be totally wrong here.

[pgengler]

Of course, there's always the cost of oil to worry about. Profitability isn't as simple as some may have thought.

AP: Oil price surge may delay airline recovery (http://www.businessweek.com/ap/financialnews/D8I25S0O0.htm?sub=apn_home_down&chan=db)


Soaring fuel prices could delay a return to profit for the US$450 billion (euro350 billion) airline industry, its main global body warned Monday, as cost-cutting efforts fail to keep pace.
...
Unless the price of oil stops rising, IATA chief Giovanni Bisignani said, the sector is unlikely to meet its goal of averting a seventh straight year of net losses since the Sept. 11 attacks by breaking even next year. ...

[PhilDernerJr]

focusing on the profitability

Gee, what a radical concept.

I read this article earlier today and also thought how stupid it was.

[Matt Molnar]

Another problem is that due to high loads, airline employees are having trouble travelling on passes, would not be surprised in the future, if airline employees waive their rights to passes, in return for wage increases.

I don't know about that. An airline would probably laugh in their face if a union leader suggested such a thing. The cost of filling a few empty seats with employees is negligible compared to paying out real cash.

[Midnight Mike]

I don't know about that. An airline would probably laugh in their face if a union leader suggested such a thing. The cost of filling a few empty seats with employees is negligible compared to paying out real cash.

Yeah, but, if airline employees can not get on flights due to high loads, what good is this benefit?

Higher loads, less open seats......

[Midnight Mike]

I'm going to try not to laugh too hard with this statement. I'm glad the airlines finally woke up and said "hmmm lets make some money." The airlines have ALWAYS been focused on making a profit. They are public companies, what shareholder is going to sit back and accept a company not focused on making money.

Tommy

Don't laugh, WSJ had a good point in that over the years, airlines were constantly to maintain market share or to drive another airline out of a market. By constantly doing this, the airline were focusing on market share rather than profability.