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US Airways Thinks It Can Break From Pack
TheStreet.com
01/29/09 - 03:57 PM EST
CHARLOTTE, N.C. -- US Airways said it will do better than competitors this year, largely because it has less international exposure but acknowledged that its view of the future is "extremely murky."
"Forward bookings are more volatile than in the past," said President Scott Kirby, on a fourth-quarter earnings conference call, after US Airways reported a loss, primarily because of fuel hedging. "I don't know how anyone can give a credible forecast for the full year," he said. "I don't think I can give a credible forecast for the first quarter."
Among the mixed signals: Business demand is weak, but leisure demand is "surprisingly resilient," Kirby said. Leisure travel yields are low, however, due to intense discounting, "a phenomenon that didn't begin until January of this year." But January and the first two weeks of February are historically slow periods, and "the pricing environment is likely to firm."
Meanwhile, international flying is starting to underperform domestic, largely as a result of industrywide 10% fourth-quarter reductions in domestic capacity. "It appears domestic will outperform on passenger revenue by a pretty wide margin, and we are 80% domestic," Kirby said. At US Airways, first-quarter transatlantic RASM will likely decline by 10 points, he said.
Ancillary revenue from baggage fees and other sources, which added $100 million in the fourth quarter, tends to have a more profound impact for domestic carriers, he said.
Despite the outlook, CEO Doug Parker declined to say whether US Airways will be profitable in 2009, a forecast that both AirTran and Delta have made. However, he said, "We feel like we've made all the right moves to prepare for the environment in 2009," reducing capacity and adding fees.
I think it safe to say that ALL airlines had a pretty dismal Q4.
Since I don't have the energy to look I'm wondering what the statements of cash flow for these companies look like.
The problem facing US isn't a lack of international flying; it's a failure of leadership to figure out how to raise fares on the flying it currently does. Other airlines have increased yields and RASM. US has failed.
2) To say a lack of international flying isn't part of the explanation is simply not true, although early estimates say that for 2009, intl flying will probably underperform the domestic sector this year (on a YOY % change basis).