Taken from TC.com
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Top US airlines suffer heavy 3Q losses
By Kevin Done in London
Published: October 20 2004 20:04 | Last updated: October 20 2004 20:04
Three of the top four US airlines on Wednesday disclosed heavy third quarter losses underlining the parlous state of the US aviation industry.
American Airlines, the world’s biggest carrier, said it had fallen from a $1m net profit a year ago to a net loss of $214m and warned that its loss in the fourth quarter would be “significantly larger” than in the third.
It warned of further job losses and announced capacity cuts for next year and the postponement of soe aircraft deliveries.
Delta Air Lines, the third largest US carrier which is teetering on the brink of collapse into Chapter 11 bankruptcy protection, said that its third quarter loss had nearly quadrupled from $164m to $646m.
It is seeking to negotiate $1bn of annual cost savings from its pilots as well as big concessions from other stakeholders including creditors, lessors and suppliers. “As Delta’s financial situation continues to deteriorate, time is of the essence,” warned Gerald Grinstein, Delta chief executive.
Northwest Airlines, the number four US carrier, fell from a net profit of $42m a year ago to a net loss of $46m.
The losses have been racked up in the summer quarter, seasonally the strongest three months of the year when northern hemisphere airlines traditionallly earn the bulk of their profits to offset much weaker earnings in the winter months.
The US airline industry is undergoing the worst financial crisis in its history with the fourth successive year of heavy losses.
Two leading carriers, United Airlines and US Airways, are already in Chapter 11 bankruptcy protection, and if Delta and ATA, the tenth largest US airline, also file for bankruptcy in the near future, as feared, unprecedentedly close to half the US industry would be operating in bankruptcy.
The US Business Travel Coalition, representing corporate travel buyers, warned last week, that there was an “increasing probability that the US airline industry will experience a catastrophic failure in the next 12 months defined as two or three major network airline liquidations”.
American Airlines said on Wednesday that it had been hit by three dramatic developments in the third quarter, the record high fuel prices, a weak revenue environment - with continuing fare discounting and heavy pressure from low cost carriers - and the unprecedented series of hurricanes, that had depressed revenues, increased costs and repeatedly disrupted an important part of the group’s network. American said that unlike other fuel-intensive industries it had been largely unable to pass on the higher fuel costs to its customers. Its fuel bill for the quarter had risen by $342m to $1.1bn.
The airline said that its yields (passenger revenue per passenger mile) had dropped by 4.8 per cent year-on-year in the third quarter, as it failed to regain any pricing power despite recovering traffic volumes.
Gerard Arpey, American chief executive, blamed the weak revenue environment partly on growing competition from the low cost carriers but also on airlines’ own moves to increase capacity despite their mounting losses combined with aggressive pricing actions by already bankrupt carriers.
“There is a growing disconnect between industry capacity growth in the domestic marketplace and overall economic growth,” he said. “Making matters worse has been the competitive behaviour of some carriers either in or on the verge of bankruptcy.”
Mr Arpey said the “harsh reality” was that American’s cost structure remained too high for it to succeed “in a world where the price of oil is at such an extraordinary level”. The group expected the record high fuel prices to continue in the current quarter. American warned that it would be forced to make further job reductions but released no details. At the same it said it was cutting capacity for next year by the equivalent of 15 narrow-body aircraft with domestic capacity falling by 5 per cent in the first quarter. American Eagle, its regional affiliate, had also reached agreement with Embraer, the Brazilian aircraft maker, not to take delivery of its last 18 ERJ-145 regional jets, scheduled for delivery between July 2005 and February 2006.
American is reversing too its previously much trumpeted decision to reduce the number of seats in its economy class cabins in order to offer passengers increased leg room. Mr Arpey said that “in today’s low-fare environment having fewer seats on our aircraft has put us at a real revenue disadvantage compared to other airlines”.
The group is also planning to expand its operations on routes to the Asia-Pacific region, and to simplify its fleet by reducing the number of aircraft types at some of its airports.
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I got a couple of pockets to fills of the goverment wants to waste money!!
IGO
____________________________________________________________
Top US airlines suffer heavy 3Q losses
By Kevin Done in London
Published: October 20 2004 20:04 | Last updated: October 20 2004 20:04
Three of the top four US airlines on Wednesday disclosed heavy third quarter losses underlining the parlous state of the US aviation industry.
American Airlines, the world’s biggest carrier, said it had fallen from a $1m net profit a year ago to a net loss of $214m and warned that its loss in the fourth quarter would be “significantly larger” than in the third.
It warned of further job losses and announced capacity cuts for next year and the postponement of soe aircraft deliveries.
Delta Air Lines, the third largest US carrier which is teetering on the brink of collapse into Chapter 11 bankruptcy protection, said that its third quarter loss had nearly quadrupled from $164m to $646m.
It is seeking to negotiate $1bn of annual cost savings from its pilots as well as big concessions from other stakeholders including creditors, lessors and suppliers. “As Delta’s financial situation continues to deteriorate, time is of the essence,” warned Gerald Grinstein, Delta chief executive.
Northwest Airlines, the number four US carrier, fell from a net profit of $42m a year ago to a net loss of $46m.
The losses have been racked up in the summer quarter, seasonally the strongest three months of the year when northern hemisphere airlines traditionallly earn the bulk of their profits to offset much weaker earnings in the winter months.
The US airline industry is undergoing the worst financial crisis in its history with the fourth successive year of heavy losses.
Two leading carriers, United Airlines and US Airways, are already in Chapter 11 bankruptcy protection, and if Delta and ATA, the tenth largest US airline, also file for bankruptcy in the near future, as feared, unprecedentedly close to half the US industry would be operating in bankruptcy.
The US Business Travel Coalition, representing corporate travel buyers, warned last week, that there was an “increasing probability that the US airline industry will experience a catastrophic failure in the next 12 months defined as two or three major network airline liquidations”.
American Airlines said on Wednesday that it had been hit by three dramatic developments in the third quarter, the record high fuel prices, a weak revenue environment - with continuing fare discounting and heavy pressure from low cost carriers - and the unprecedented series of hurricanes, that had depressed revenues, increased costs and repeatedly disrupted an important part of the group’s network. American said that unlike other fuel-intensive industries it had been largely unable to pass on the higher fuel costs to its customers. Its fuel bill for the quarter had risen by $342m to $1.1bn.
The airline said that its yields (passenger revenue per passenger mile) had dropped by 4.8 per cent year-on-year in the third quarter, as it failed to regain any pricing power despite recovering traffic volumes.
Gerard Arpey, American chief executive, blamed the weak revenue environment partly on growing competition from the low cost carriers but also on airlines’ own moves to increase capacity despite their mounting losses combined with aggressive pricing actions by already bankrupt carriers.
“There is a growing disconnect between industry capacity growth in the domestic marketplace and overall economic growth,” he said. “Making matters worse has been the competitive behaviour of some carriers either in or on the verge of bankruptcy.”
Mr Arpey said the “harsh reality” was that American’s cost structure remained too high for it to succeed “in a world where the price of oil is at such an extraordinary level”. The group expected the record high fuel prices to continue in the current quarter. American warned that it would be forced to make further job reductions but released no details. At the same it said it was cutting capacity for next year by the equivalent of 15 narrow-body aircraft with domestic capacity falling by 5 per cent in the first quarter. American Eagle, its regional affiliate, had also reached agreement with Embraer, the Brazilian aircraft maker, not to take delivery of its last 18 ERJ-145 regional jets, scheduled for delivery between July 2005 and February 2006.
American is reversing too its previously much trumpeted decision to reduce the number of seats in its economy class cabins in order to offer passengers increased leg room. Mr Arpey said that “in today’s low-fare environment having fewer seats on our aircraft has put us at a real revenue disadvantage compared to other airlines”.
The group is also planning to expand its operations on routes to the Asia-Pacific region, and to simplify its fleet by reducing the number of aircraft types at some of its airports.
__________________________________________________________
I got a couple of pockets to fills of the goverment wants to waste money!!
IGO
