Turnaround for airlines in 06
01-02-2006, 09:28 PM
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Turnaround for airlines in 06
More airlines expecting to fly into black
By Associated Press
Tuesday, January 3, 2006
The U.S. airline industry is coming off an up-and-down year that saw two major carriers file for bankruptcy but others begin to pull out of a nosedive that began in 2001.
Losses at the biggest U.S. airlines since the economic downturn in 2001 were expected to approach $30 billion. Still, 2005 was nearly a good year.
Some companies, including the parent of American Airlines, the largest U.S. carrier, could have turned a profit if fuel prices hadn’t shot so high. Some airlines narrowed their losses by sharply cutting costs other than fuel, including wringing wage concessions out of their workers.
Some analysts think 2006 will be a pivotal year. Michael Linenberg of Merrill Lynch says fewer planes flying, rising fares and lower fuel prices could lift the stock of airlines. He calls it a reversal of the perfect storm — costly fuel, growth of low-cost carriers and too many seats on sale — that swamped the carriers in red ink.
Delta Air Lines Inc. and Northwest Airlines Corp. filed for bankruptcy in September, joining UAL Corp., the parent of United Airlines, which has been operating under bankruptcy protection since 2002.
The new year started off with news of some of that extra capacity disappearing: FLYi Inc., the bankrupt parent of Independence Air, said it would shut down its operations on Thursday evening.
Dallas-based Southwest Airlines has been the only carrier to be consistently profitable in the current slump.
Chief Executive Gary C. Kelly agreed that trends are looking up.
“The economy is continuing to grow at a healthy rate, business travel is continuing to pick up, and industry capacity (measured in seats times miles flown) has moderated and even shrunk in some areas,” Kelly said. “If all those underlying conditions continue, we ought to have robust revenue production for the industry next year.”
By Associated Press
Tuesday, January 3, 2006
The U.S. airline industry is coming off an up-and-down year that saw two major carriers file for bankruptcy but others begin to pull out of a nosedive that began in 2001.
Losses at the biggest U.S. airlines since the economic downturn in 2001 were expected to approach $30 billion. Still, 2005 was nearly a good year.
Some companies, including the parent of American Airlines, the largest U.S. carrier, could have turned a profit if fuel prices hadn’t shot so high. Some airlines narrowed their losses by sharply cutting costs other than fuel, including wringing wage concessions out of their workers.
Some analysts think 2006 will be a pivotal year. Michael Linenberg of Merrill Lynch says fewer planes flying, rising fares and lower fuel prices could lift the stock of airlines. He calls it a reversal of the perfect storm — costly fuel, growth of low-cost carriers and too many seats on sale — that swamped the carriers in red ink.
Delta Air Lines Inc. and Northwest Airlines Corp. filed for bankruptcy in September, joining UAL Corp., the parent of United Airlines, which has been operating under bankruptcy protection since 2002.
The new year started off with news of some of that extra capacity disappearing: FLYi Inc., the bankrupt parent of Independence Air, said it would shut down its operations on Thursday evening.
Dallas-based Southwest Airlines has been the only carrier to be consistently profitable in the current slump.
Chief Executive Gary C. Kelly agreed that trends are looking up.
“The economy is continuing to grow at a healthy rate, business travel is continuing to pick up, and industry capacity (measured in seats times miles flown) has moderated and even shrunk in some areas,” Kelly said. “If all those underlying conditions continue, we ought to have robust revenue production for the industry next year.”
