Airline Finance News - North America

AirGuide Business, July 7, 2008

7/7/2008

Reports from carriers indicate that June traffic remained steady for domestic flights and rose in some international markets. Airlines are planning large capacity cuts after Labor Day as part of an effort to offset the soaring cost of fuel. 7/3/2008

United Airlines, which plans to cut up to 1,600 jobs, is the first big airline to detail the impact of cuts on pilots, layoffs are planned at all major carriers as they try to offset record-high fuel prices. American Airlines said in May staff cuts were coming, and on Wednesday said it would shed 900 flight attendants. Continental Airlines plans to cut 3,000 jobs and US Airways plans 1,700 cuts. Delta Air Lines, which plans to merge with Northwest Airlines, said earlier this year it would eliminate 2,000 jobs. Northwest also expects job cuts. 7/3/2008

Congress can look for scapegoats, The Wall Street Journal's Keith Johnson writes, but the cause of high oil prices is basic: surging demand coupled with finite supply. The latest International Energy Agency report helps prove the peak-oil theory is going mainstream, he argues. "Supply simply can't keep pace with demand -- everybody with an oil well has the taps open, but there's not much left in the keg," Johnson writes. 7/2/2008

Nine U.S. senators want their colleagues to end partisan bickering and convene an energy summit immediately after the congressional recess for Independence Day. "Our hope is to hear from the best experts on energy policy who can present an unbiased view of the most promising approaches, including both enhanced conservation and increased domestic fuel production, that reduce [gasoline] prices, lessen our dependence on foreign oil, and strengthen our economy," they wrote in a letter to Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky. 7/2/2008

U.S. officials criticized a plan by the EU to include airlines in a carbon dioxide emissions trading system and say it is inconsistent with international law. The EU last week agreed to include all carriers that fly to and from EU airports in the scheme, which will be implemented in 2012. 7/2/2008

The International Energy Agency has reduced its 2012 global demand forecast by more than 3 million barrels a day. The cut is based on a belief that record prices and slower economic growth will curb fuel purchases. "While recognizing that speculation can have a day-to-day impact on price moves, the fact that all producers are working virtually flat out and that there is no sign of any abnormal stockbuild gives a strong indication that current oil prices are justified by fundamentals," the IEA said. 7/1/2008

The recent increase in the cost of oil reflects anticipation of strong demand in the future, writes Martin Feldstein in The Wall Street Journal. He noted that increasing the expected future supply would reduce today's oil prices. "That fall in the current price would induce an immediate rise in oil consumption that would be matched by an increase in supply from the OPEC producers and others with some current excess capacity or available inventories," Feldstein writes. 7/1/2008

Survey of International Air Travelers, which has been conducted on international flights and at airport gates by the US Dept. of Commerce on a monthly basis for 25 years, is taking steps toward automating the process, and airlines can benefit from the move by placing a link on their websites that will appear when a passenger completes an international booking to or from the US. The link will take the passenger to a web portal set up by DOC's Office of Travel & Tourism Industries to conduct the surveys and collect the data. DOC will pay $1 to the airline for each completed survey. In addition, participating carriers will have instant access to the data that are collected. Addison Schonland, president of Innovation Analysis Group, the project manager, said airlines "can see what happened yesterday." He added that a carrier with a large international network could conceivably earn $500 a day from the program, and installing the link takes about 15 min. Currently, 60 airlines participate in the paper version of the survey, a labor-intensive process for which they receive data reports but are not otherwise compensated. 6/30/2008

Air Canada

Air Canada is cutting 2,000 jobs, or 7 percent of its work force. That is on top of its addition of fuel surcharges on fares earlier in the year. Stuart said Jazz has yet to determine which routes will be cut, or frequency reduced, as Air Canada has not finalized its plan. Before the current round of cuts, Jazz was preparing to end service to Hamilton, Ontario, and Comox, British Columbia. There are no plans to park any of the airline's 137 aircraft, she said. Until the end of May, Jazz and Air Canada were partly owned by ACE Aviation, but ACE has sold its remaining interest in Jazz. It still owns 75 percent of Air Canada. 7/4/2008

Air Canada

Air Canada and Jazz flew 4.31 billion combined RPMs in May, up 4.5% year-over-year. Capacity rose 4% to 5.17 billion ASMs, lifting load factor 0.3 point to 83.2%. 6/30/2008