Airline Finance News

Airguide Online, March 27, 2006

Airlines expand fuel hedging programs. Some airlines are expanding their fuel hedging programs to protect themselves against a possible climb in oil prices. Soaring fuel costs have caused airlines to post large losses in recent years. Mar 24, 2006

IATA halved its loss forecast for 2006 to $2.2 billion from a previous forecast of $4.3 billion and now expects the world's airlines to earn $7.2 billion in 2007, increased from earlier estimates of a $6 billion profit next year. The improvement is being driven by events in North America and particularly the US, where a 3% reduction in domestic capacity coupled with strong traffic is producing double-digit unit revenue growth. Mar 24, 2006

IATA now expects US carriers to lose $5.4 billion this year, down from $10.4 billion in 2005. "Restructuring in the US industry has produced some impressive results, including a 34% increase in productivity," DG and CEO Giovanni Bisignani stated. Nonetheless, he said that at 33% of operating costs, "US labor costs are higher than their competitors in both Europe and Asia." Asia/Pacific carriers are forecast to earn $2 billion this year, reduced from $2.9 billion last year, while European airlines will see profitability decrease to $1.4 billion from $1.8 billion. The revised forecasts are based on crude oil prices of $57 per barrel (Brent) in 2006 and $52 in 2007. Mar 24, 2006

Airlines will post $7.2 billion profit in 2007, group says. The International Air Transport Association expects the world's airlines to post a profit of $7.2 billion in 2007, up from previous projections of $6.2 billion. IATA predicts the industry will lose $2.2 billion in 2006. The group expects carriers to benefit from strong demand and more efficient operations.

Mar 23, 2006

Airlines post higher yields, regain pricing power. Airlines yields indicate the industry is regaining its pricing power. Domestic yields have posted their biggest year-over-year increase since August 1993, according to the Air Transport Association. Domestic yield rose 12.2% in February for seven major carriers. Mar 23, 2006

High rents, fees curtail growth of Canadian carriers, official says. Canadian airlines face high airport rents and other fees that threaten their productivity, said Cliff MacKay, president and chief executive of the Air Transport Association of Canada. MacKay noted a new Open Skies agreement with the U.S. is set to begin in September and said continued high costs could affect related economic development. Mar 23, 2006

Pilot leaders help ailing airlines survive. Pilot leaders must walk a fine line as they negotiate contracts and pay cuts. On Wednesday, Bill Pollock stepped down as union chairman at US Airways, where he negotiated pay cuts that allowed the carrier to emerge from bankruptcy protection. "It was the full spectrum of human emotion and character," Pollock said. "It ranged from, on the one hand, the idealist cause of working hard to see the company return to profitability, to, on the other hand, every man for himself." Mar 23, 2006

Large airlines will continue recovery, analyst says. Large airlines will increase prices again and continue recovering, according to analyst Ray Neidl. Neidl raised his rating on most large airlines on Tuesday, citing strong demand and lower costs. Mar 22, 2006

US scheduled airlines' January employment rolls dropped 6.1% from January 2005 to 405,000, according to a US Dept. of Transportation report released yesterday, marking the 13th consecutive monthly decline in the number of full-time equivalent employees. The seven network airlines employed 270,000 FTEs, or 66.5%, while LCCs employed 17% and Regionals 14%. The latter figure represents a 1.8% year-over-year fall, the first decrease in Regional employment during the 13-month period. Mar 22, 2006

Airline stocks post gains ahead of summer season: Expectations of a strong summer travel season have pushed airline stocks higher in the past week. "We're going into the strong season of the year, fuel prices are perceived to be higher than the supply-demand equilibrium suggests, there's been significant pulldown in capacity, and pricing leverage is back in the airline industry," said Vaughn Cordle, chief executive officer of AirlineForecasts LLC and a pilot at a large carrier. "Add all those things up, and you have a nice, robust move upward in the airline sector." Mar 22, 2006

Airline workers struggle to book free flights. Airline employees are having a harder time booking free flights because so many planes are full. On average, planes fly with 22% of seats unsold, but many of those seats are on unpopular routes or at undesirable times. Mar 21, 2006

Experts praise progress in US Airways-America West merger. The merger of US Airways and America West is drawing praise from some industry observers. Chief Executive Doug Parker is carefully combining the company's employee groups. "We've certainly gotten through enough stuff that we have confidence that what's left is manageable," Parker said. "We've climbed a bit of the mountain, and the rest is sort of the same grade." US Airways saw its revenue per available seat mile increase 16% in the fourth quarter. Mar 21, 2006