Airline Finance News - North America

AirGuide Business, April 14, 2008

Apr 14, 2008

The Airline Reporting Corporation (ARC) reported sales of $7.5 billion for March 2008, an almost two percent decrease compared to March 2007. Total transactions also declined nine percent to 13,828,713 from the same time last year and ARC reports a 3.4 percent decline in total transactions year to date. It offered no explanation for the declines. Domestic fares declined 4.4 percent to $3.3 billion from 2007, as did domestic transactions by 10.2 percent. Total fares reported for March both domestic and international declined 2.7 percent from 2007; however, international fares increased 8.1 percent and domestic fares were up 0.5 percent year to date. Visit www.arccorp.com Apr 11, 2008

Another way airlines are cutting costs is by reducing the number of empty seats. Some airlines are replacing one larger flight with several smaller ones, which crowds the runways and skies. Coupled with an antiquated air traffic control system, the increase in airplanes has led to a spike in delays - and losses totaling $9 billion in 2007, according to industry analysts. According to a recent study by the U.S. Department of Transportation, more than 31% of U.S. commercial flights were delayed, canceled or diverted in February. That's a jump up from 2007's statistics, which showed that 26% of commercial flights experienced delays. And last year was the worst on record for airline delays since the government began collecting that data in 1995. Apr 10, 2008

Core industry will survive. But even amid all the bad news from the airline industry, passengers will not need to switch to boats or railroads to travel long distances. But that doesn't mean everything will stay the same. The most visible changes will be continued fare hikes and fewer non-stop flights to less popular routes. And cargo and specialty charter airlines like ATA and Skybus may be in trouble. Apr 10, 2008

The U.S. Transportation Department on Wednesday tentatively approved antitrust immunity for Northwest Airlines and its SkyTeam alliance partners, Northwest said. The decision, if finalized, will enable Northwest, Delta Air Lines, Air France KLM, Alitalia and CSA Czech Airlines to expand their transatlantic networks by coordinating schedules and services. Approval is crucial for Northwest's plans to boost international flying, especially new nonstop service between Minneapolis/St. Paul and Paris. Apr 10, 2008

With crude oil hovering around $110 a barrel and the cost of jet fuel doubling since last year, airlines are struggling to keep costs down amid bitter fare competition. Rising fuel costs forced ATA, Aloha Airlines, and Skybus to stop flying last week, and Alitalia said Tuesday it will only last for a "very short term" with its current cash level. In an attempt to offset surging fuel prices, major U.S. carriers have passed much of the cost to passengers. Discount seats are dwindling in number. Continental, Delta, and United have recently raised some of their ticket prices, and US Airways said it is studying the idea. And Northwest, Delta, and Continental have recently raised fees for services such as extra baggage, telephone reservations, unaccompanied minors, pets, food and beverages. Since fuel is the largest expense for the airline industry, airlines are having a tough time withstanding such a huge change to their business model, Stempler noted. Escalating costs have led to merger talks between Northwest and Delta. If completed, some analysts believe the deal would lead to more mergers and even higher fares for passengers. Apr 10, 2008

The Airline Reporting Corporation (ARC) issued a statement Friday afternoon that it has revised its financial plans for 2008 and taken a number of actions including reducing its personnel by four percent. Airline owned ARC said the move was in response to the "rapidly changing economies of the air travel market." ARC President and CEO, David Collins said, [sup.3]While these measures are difficult, we remain committed to delivering cost-effective services and innovative solutions to our customers.[sup.2] Recent results and carrier announcements on capacity changes require us to respond accordingly. It offered no other explanation. Airlines, travel agencies, corporate travel departments, railroads and other travel suppliers process $80 billion annually through ARC[sup.1]s settlement system. Recent fee increases, which would increase travel agents[sup.1] share of ARC[sup.1]s costs, have drawn the ire from ASTA and the agency community. Visit www.arccorp.com Apr 7, 2008

What airline will be the next to shut down? "That's the $64,000 question," said George Hamlin, managing director for ACA Associates, a New York aviation consulting firm. With a credit crunch that has all but eliminated "sugar daddies to bail out airlines, the word to the wise is that weaker carriers will drop off first." Analysts said regional carriers ExpressJet, Frontier and recent start-up Virgin America were considered somewhat vulnerable if fuel prices continued to hover at record levels. All three have service at Southern California airports. ExpressJet, which last year launched service from Ontario Airport, recently began flights from Long Beach Airport and has been trying to lure budget-conscious travelers with low fares. Virgin America, a carrier started by British billionaire Richard Branson, has been adding flights at LAX to destinations such as Seattle and Washington, D.C. Frontier is facing intense competition from much larger carriers Southwest Airlines and United Airlines for flights to Colorado and elsewhere. Apr 7, 2008