Airline Finance News - North America

AirGuide Business, March 24, 2008

Mar 24, 2008

Airlines scale back fleets, capacity plans. The soaring cost of fuel is forcing airlines to scale back their fleets and capacity plans. Delta Air Lines this week said it would offer buyouts to employees, and United Airlines is retiring planes. Frontier Airlines said it will sell two jetliners and revise its capacity plans, citing the high cost of fuel. Mar 21, 2008

Fuel prices play role in stalling merger, union says. A letter from leaders of Northwest Airlines pilot union to the rank and file suggests that fuel costs were responsible for stalling merger talks with Delta Air Lines. The union also indicated that arbitration and economic incentives could help accomplish a merger. Mar 21, 2008

The Washington Post's Steven Pearlstein writes that heavy unionization within the airline industry keeps carriers from becoming more efficient and lowering their costs. "There is no getting around the fact that the airlines also suffer from unions that, 30 years on, still haven't fully accepted the reality of a deregulated marketplace where the interests of consumers come before those of employees," he writes. Mar 21, 2008

Airline executives attending a JP Morgan conference in New York said the weakening economy and surging oil prices have stalled the industry's merger prospects. However, they also added that they have not completely ruled out consolidation. JP Morgan reduced its ratings on two carriers, and analyst Jaime Baker noted that the industry could post a loss of up to $9 billion. Mar 19, 2008

Canadian carriers continue to see strong demand. Demand for travel in Canada is expected to remain strong for the first half of this year, according to Canadian airline executives. "We have not seen any dramatic change in our booking levels," Air Canada CEO Montie Brewer said. "It's still at a very heavy, healthy rate relative to the U.S. guys." Mar 19, 2008

Airlines plan capacity cuts/fleet reductions to offset soaring fuel price. The steep climb in the price of fuel is forcing several airlines to reevaluate their plans for growth this year. United, Delta, JetBlue and US Airways have all announced fleet cutbacks, and Northwest Airlines indicated it will cut capacity by September. Meanwhile, Southwest Airlines said it is continuing to evaluate its growth plans. Mar 18, 2008

Soaring fuel, weak economy force carriers to find ways to scale back. Higher fuel prices and the weakening economy are forcing carriers to scale back their operations by cutting unprofitable routes. Some airlines are carefully evaluating regional jet operations and looking for ways to conserve cash while cutting expenses. Record oil prices sent airline stocks sharply lower on Monday. Mar 18, 2008

US airlines carried 769.4 million passengers in 2007, up 3.3% from 2006 and an all-time high, according to US Dept. of Transportation statistics released last week. Domestic passengers were up 3.1% to 679 million while international passengers rose 4.7% to 90 million. Southwest Airlines carried more total system passengers (101.9 million) than any other carrier, the first time it has topped the list, besting American Airlines (98.2 million), which led each of the previous five years. Total US airline system traffic increased 4% to 829.4 billion RPMs on a 3.1% lift in capacity to 1.04 trillion ASMs, producing a load factor of 79.9%, up 0.7 point. Mar 17, 2008

Air Canada

Air Canada's Brewer said, the country's biggest carrier, had no change to its bookings for the next three months and expects a busy summer travel season. Air Canada's class A shares, down by half over the past 12 months, fell a further 25 Canadian cents to CAD$8.65 on Tuesday on the Toronto Stock Exchange. Mar 18, 2008

Air Canada

Air Canada and Jazz flew a combined 3.81 billion RPMs in February, up 5.8% on the year-ago month. Capacity rose 6.3% to 4.81 billion ASMs, dropping load factor 0.4 point to 79.2%. Mar 17, 2008

Air Canada, WestJet Airlines

Canada's two major airlines said on Tuesday Mar. 18 they have yet to see domestic demand for air travel slacken because of the slumping US economy, though fuel costs are a rising concern. Speaking at a Toronto investment conference, the chief executives of Air Canada and WestJet Airlines said domestic demand for air travel remains robust and there has been little sign so far of the turbulence that has roiled US carriers. US airlines have been hit hard by the economic downturn, which has cut travel demand at the same time that costs climb due to record fuel prices. The trouble in the US market, spurred by the fallout from the subprime mortgage crisis, was highlighted on Tuesday when Delta Air Lines said it would cut 2,000 jobs, or 3 percent of its staff, and cut flights. Mar 18, 2008

AirTran Airways

AirTran Airways has scaled back its capacity growth plans to 5% for 2009 and 2010. The airline said it will sell or reschedule the deliveries of new planes. Mar 19, 2008

AirTran Airways

AirTran Airways flew 1.42 billion RPMs in February, a 28.2% rise from the year-ago month. Capacity rose 14% to 1.82 billion ASMs and load factor soared 8.6 points to 78.1%. Mar 18, 2008