US Airways forecasts rising CASM, falling capacity

[700UW]

US Airways forecasts rising CASM, falling capacity

Monday July 9, 2007

US Airways said last week in a filing with the US Securities and Exchange Commission that it expects second-quarter nonfuel CASM to be higher than previously forecast, primarily due to maintenance costs related to returning eight leased aircraft throughout the year, the timing of engine MRO expenses and "additional spending to improve our operation."

CASM is expected to rise in the third and fourth quarters as well due to an approximate 2% mainline and regional capacity reduction implemented through decreased utilization and "as a result of industry conditions."

US forecasts a 5% year-over-year rise in mainline second-quarter CASM excluding fuel, special items and transition expenses and a 2%-4% increase for the full year. Second-quarter US Airways Express figure is expected to be up 7% year-over-year and 4%-6% for the full year.

The group also unveiled its fleet plan for the year. It will end the quarter with 358 mainline aircraft and the full year with 356, taking into account the scheduled addition of six E-190s and the departure of eight 737-300s. The nine airlines constituting US Airways Express will end the quarter with 282 aircraft and the year with 287 as five E-170s, two CRJ200s and two ERJ-145s leave the fleet and 14 E-175s are added.


by Brian Straus

 

[john john]

US Airways forecasts rising CASM, falling capacity

Monday July 9, 2007

US Airways said last week in a filing with the US Securities and Exchange Commission that it expects second-quarter nonfuel CASM to be higher than previously forecast, primarily due to maintenance costs related to returning eight leased aircraft throughout the year, the timing of engine MRO expenses and "additional spending to improve our operation."

SHARES AND THE E-190

 

[Pylit]

You can tell the labor groups want a raise when the doom and gloom financial predictions start flowing from the head shed. Let the hand-wringing begin!

Note: These are forward looking statements, guaranteed for 10 minutes or 10 miles, whichever comes first, your results may vary. Do not take if you experience anxiety, chest pains, or headaches. Plan projections do not always reflect plan performance.

 

[jack mama]

sadly enough, it looks like prasm and load factor are going to be high enough in the 2Q for LCC to post a profit. that means more the same down the tube operations and more shares and sceptre!

 

[SpinDoc]

sadly enough, it looks like prasm and load factor are going to be high enough in the 2Q for LCC to post a profit. that means more the same down the tube operations and more shares and sceptre!

What needs to happen now, is that US and other carriers need to reduce capacity by about 6% to 8% industrywide, and then increase fares about 20%. What this would do is lower the load factors to the low 80's, allowing some breathing room for recovery when weather or other situations occur. Of course, this will never happen because most of the large airlines will go bankrupt before they cede either market share or low fares that they can advertise to keep the Greyhound crowd traveling.

 

[ClueByFour]

What needs to happen now, is that US and other carriers need to reduce capacity by about 6% to 8% industrywide, and then increase fares about 20%. What this would do is lower the load factors to the low 80's, allowing some breathing room for recovery when weather or other situations occur. Of course, this will never happen because most of the large airlines will go bankrupt before they cede either market share or low fares that they can advertise to keep the Greyhound crowd traveling.

Absent the "Greyhound crowd," (or their traffic) and you can immediately wipe US off the map, and take 2 of the remaining majors with it.

 

[SpinDoc]

Absent the "Greyhound crowd," (or their traffic) and you can immediately wipe US off the map, and take 2 of the remaining majors with it.

Agreed that the Greyhound crowd is necessary to fill planes, however, the rock bottom fares they are purchasing don't bring in the bulk of the revenue that is needed to sustain profitability. Operating an airline on loss leaders is what killed Indy Air. You can't continuously sell tickets at prices that are lower than the cost of providing the service and expect to maintain a profit.

High load factors look good on paper, but they leave little room for providing alternative travel arrangements when operational problems arise. US and other carriers cannot continue to strand paying passengers at hubs for two or three days because of a lack of seat availability.
All that strategy does is produce angry customers who will not become repeat customers. Also, when the operational problems are caused by maintenance or crew availability, the costs for providing food and lodging for the stranded customers are surely significant.

My entire point is that fares need to be increased by at least 15% across the board in order to effect a drop in systemwide load factor to the low 80's. This would give some breathing room during operational problems, and will ensure revenue remains high enough to sustain profits.