Low-cost airlines who posted a second quarter operating income, even without the government handouts, were Southwest, America West, Alaska, and JetBlue.
Every major airline network carrier who has reported earnings, posted operating losses in the second quarter, including American, Delta, Northwest, & Continental.
The four carrier's who have reported earnings should provide a warning sign for those parties interested in US Airways, who will report on July 28, and United who will report on August 1, because it appears US Airways and United will follow the other legacy airline's with an operating loss.
If true, US Airways management will have the contractual right to continue the 5% wage deferral. Moreover, with the pending post Labor Day traffic fall off, September 11 anniversary fear, and winter bookings, I believe the company/industry will not return to profitability until the second quarter of 2004. Thus, US Airways employees may not see the 5% wage deferral repaid until July 2004.
The main issue continues to be that US Airways and other legacy airline costs are still too high to compete with the low cost carriers. Management must continue to cut costs in every area possible and while they're small numbers in and of themselves, the company's bottom line is equally as small. Therefore, anything management can do to tweak costs becomes enormous for airlines with a capital-intensive balance sheets.
With that said, I do not believe US Airways needs to get its unit costs down to Southwest because the Arlington-based airline continues to have a yield revenue premium, however, management must close the cost gap with low cost carrier's to be successful long-term.
Best regards,
Chip