Airline Revenues Continue to Fall

Boomer

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Aug 20, 2002
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Chip,
Given that ATSB financing is dependent on hitting the revenue goals; do these numbers indicate that such goals are un-obtainable even if all the Unions were to agree to the new concession packages?
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http://www.newsday.com/business/nationworl...ess%2Dheadlines
Airline Shares Fall After More Bad News

By BRAD FOSS
AP Business Writer
December 18, 2002, 4:20 PM EST
NEW YORK -- The most recent bad news from the airline industry shocked even the pessimists, sending stock prices sharply lower on Wednesday and forcing analysts to reconsider widely-held assumptions.
Shares of American, Delta, Continental and other major carriers fell after data from an industry group showed that revenue fell 1.5 percent industrywide in November compared with the same month a year ago.
While the decline might appear inconsequential, it caused a stir because it showed the situation worsening just when everyone thought it was improving, however minimally.
Frankly, we''re surprised by the magnitude of the deterioration, said Jamie Baker, an analyst at J.P. Morgan who had predicted a year-over-year November revenue increase of 1.8 percent.
While a single month of weak results ... doesn''t reverse our belief that revenue trends will improve in 2003, it does chip away somewhat at our conviction, Baker said in a report.
Airline analysts and executives paid little attention to comparisons made between the industry''s financial performance in September and October with its performance during the same months in 2001.
After all, the logic went, this year''s data would undoubtedly look better than last year''s because of the sharp decline in travel in the months immediately after the terrorist attacks.
But that logic was debunked after the Air Transport Association, an industry trade group, released the November revenue data late Tuesday.
Comparing November 2002 revenue with November 2000 revenue -- a 20.6 percent drop -- was no less disappointing, analysts said.
This is not only worse than October''s 16.9 percent drop, but the largest decline all year when compared to 2000, said Michael Linenberg, a Merrill Lynch analyst.
Shares of American fell 80 cents, or nearly 11 percent, to close at $6.64 on the New York Stock Exchange. Delta''s stock dropped $1.02, or 8 percent, to $11.90 on the NYSE, where shares of Continental slumped 75 cents, or nearly 10 percent, to $6.99.
Copyright © 2002, The Associated Press
 
OP
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Boomer

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Aug 20, 2002
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From Reuters, the same story.
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http://www.reuters.com/newsArticle.jhtml?t...storyID=1929968

November revenues for U.S. airlines dismal
Wed December 18, 2002 02:06 PM ET
By Kathy Fieweger
CHICAGO, Dec 18 (Reuters) - U.S. airlines are still struggling with declining revenues, new data shows, just as they head into the slowest travel period of the year and face more damage from a potential invasion of Iraq.

For an industry still depressed after the Sept. 11, 2001, attacks, key measures of financial health have yet to recover as fares remain low and fewer people fly.

One of those gauges, November revenue per available seat mile, or unit revenue, fell 1.7 percent systemwide over the year, according to airline analysts. That was bad news considering how poor the November 2001 results were following the Sept. 11 attacks.

Domestically, this November's unit revenue dropped 5.6 percent to the lowest absolute result in eight years, according to Merrill Lynch.

The industry trade group known as the Air Transport Association released the data only to Wall Street firms late Tuesday, as is its usual practice.

Most analysts were predicting a slight increase in the systemwide unit revenue figure and were surprised by the drop.

"November system revenue sank 11.2 percent from October, considerably below our minus 8.5 percent estimate," said JP Morgan analyst Jamie Baker. "These are obviously weak results .... Industry trends deteriorated in November, having largely held stable (though weak) over the past several months."

Gary Chase, analyst at Lehman Brothers, also said the data shows that demand for air travel remains stubbornly weak.

BAD OMEN

"While the industry is managing the capacity equation aggressively, pricing weakness persists, boding ill for overall industry demand and quelling the hopes of some that a pricing recovery was budding," he said.

Susan Donofrio of Deutsche Bank said the data show that airline industry revenue is not going to recover in a straight line as in the past.

Major U.S. airline stocks fell after the data's release. AMR Corp. AMR.N -- parent of American Airlines, the world's largest carrier -- fell 11 percent and No. 3 carrier Delta Air Lines DAL.N fell 8 percent, both on the New York Stock Exchange.

Plagued by high debt and low revenues, UAL Corp.'s, parent of United Airlines UAL.N , the No. 2 U.S. airline, filed for bankruptcy protection two weeks ago, following rival US Airways Group UAWGQ.OB . US Air, the No. 7 U.S. airline, filed for bankruptcy in August and has yet to file a reorganization plan with the court.

Merrill Lynch's Mike Linenberg said that without a material improvement in industry revenue, major U.S. airline stocks are likely to be confined to a broad trading range.

"A sustainable share price rally is not likely to occur unless fundamentals improve markedly," he said.

Baker of JP Morgan said while he would not expect stocks to retest their October lows, he advises waiting for about a 15 percent correction in prices before adding to positions.

"Seasonality and bankruptcy aren't reasons enough to own the airlines; revenue recovery must occur next year, in our view," he said. "Based on November results, the industry has taken a step in the opposite direction."
 
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Boomer

Veteran
Aug 20, 2002
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Chip,
Given that ATSB financing is dependent on hitting the revenue goals; do these numbers indicate that such goals are un-obtainable even if all the Unions were to agree to the new concession packages?
 

ForkTime2002

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Nov 27, 2002
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www.usaviation.com
----------------[BR]On 12/18/2002 11:49:00 AM chipmunn wrote:
[P] irrelevant irrelevant irrelevant irrelevant irrelevant irrelevant[BR][BR]Chip [/P]
[P align=left]----------------[BR][BR][/P]
 
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chipmunn

Guest
Boomer:

Despite the negative impact of a shift in the Thanksgiving holiday, November pricing results for the industry were a bit disappointing. While the industry continues to aggressively manage the capacity equation, pricing weakness persists, which is quelling the hopes of some that a pricing recovery was budding.

Domestic RASM fell 5.6% in November from very weak 2001 levels. Even after adjusting for the shift of the Thanksgiving holiday, analysts estimate that November results were 1.5 to 2 percent weaker than last year's depressed results.

In addition, reports indicate the demand shortfall slid to 23% in November from 16% in October. It appears the Thanksgiving shift caused almost a 4 percent sequential erosion, but November still appears weaker than October.

December and 2003 bookings and RASM appear to be improving, however, I expect continued pricing weakness.

Boomer, the dismal revenue environment is why US must obtain the $400 million in cost cuts to obtain the loan guarantee, credit facility, and equity investment. I believe the second and third quarter of 2003, with our lower cost structure will be cash flow positive, but it will take until the second quarter of 2004 for the airline to reach sustained profitability.

The good news is the company is well on their way to obtaining the cost cuts. The airline should receive $200 million per year in savings from closing the TPA hangar/MCO Reservation facility (with the court abrogating the lease expense), the recent 2,500 furloughs, and FAR F/A minimum staffing. With today's announcement that management will be taking $50 million per year in cuts for six years, the CWA/TWU concessions, and the ALPA $101 million give back, the company is well on its way to not only compete but to succeed in this dismal revenue environment.

Now the attention will shift to the IAM-M, IAM-FSA, AFA, and TWU-FCTI. I suspect if these unions fail to reach accords, the company would move to terminate their pensions and short staff their work groups to obtain another $150 to $200 million per year in savings.

Chip
 
Aug 23, 2002
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I believe it is going to be a very tough time for USAIRWAYS to stay in business...With so much in the news about financial problems and possibly shutting down of USAIRWAYS, passengers are buying their tickets elsewhere...The morale is at the lowest with the employees...No one knows if RSA really wants the airline out of bankruptcy, or to liquidate...The airline has asked for concessions and before the ink is dry on it, they ask for more...When will the next concession request be... in another month...Preferred members have left with the schedules being slashed, and standby fees added...Mainline jets replaced with RJ...those upgrade coupons wasted...
I do not think all the airline problems can be blamed on 9/11...I believe they has been alot of mismanagement to get to this point...I do not think the folks in Alabama (RSA) are playing on the level...
I don't know about you...I do not see light at the end of the tunnel....
 

diogenes

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Aug 22, 2002
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[blockquote]
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On 12/19/2002 12:54:36 AM chipmunn wrote:

Now the attention will shift to the IAM-M, IAM-FSA, AFA, and TWU-FCTI. I suspect if these unions fail to reach accords, the company would move to terminate their pensions and short staff their work groups to obtain another $150 to $200 million per year in savings.

Chip

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Ok, where's the incentive to vote yes - fleet has no pension and we're already short staffed. If they cut any more I get to R ande D, load and unload by myself. I'll take my chances in court.

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[/blockquote]
 

REACC1

Veteran
Aug 20, 2002
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Yeah, and youll have to move faster than that, I want that plane out on time!!! There's another full load right behind it.
 

diogenes

Veteran
Aug 22, 2002
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They're OT - we're getting 'out' times while we're still in the cargo bin.

It's a bit tricky, loading a taxiing a/c!
2.gif']
 

REACC1

Veteran
Aug 20, 2002
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What?!!! You used the word "we", there's still heads to cut.
We're still over staffed. Who's the other guy?
 

michael707767

Senior
Aug 21, 2002
332
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[blockquote]
----------------
...I do not think the folks in Alabama (RSA) are playing on the level...
I don't know about you...I do not see light at the end of the tunnel....

[/blockquote]

The folks at RSA have nothing to loose. They ask for huge cuts....if you say no, they will get their money back in CH7, if you say yes, they get their money back from the airline being so cheap anyone could make money.
 

diogenes

Veteran
Aug 22, 2002
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[blockquote]
----------------
On 12/20/2002 8:21:41 AM REACC1 wrote:

What?!!! You used the word "we", there's still heads to cut.
We're still over staffed. Who's the other guy?
----------------
[/blockquote]


LOL,REACC1, very good![img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']

Can I get away with, I intended that as the 'royal' we?

After all, we ARE getting royally screwed, blued and tatooed![img src='http://www.usaviation.com/idealbb/images/smilies/2.gif']