Originally Posted by
DCAview
There's no doubt that if AA holds the line on current labor costs while its competitors see their costs rise, AA's competitive position will improve. How does that help make AA profitable, though? Unless we assume that airlines will be able to raise fares commensurate with their increased costs (of which there's no great track record), all the leveling of labor costs would seem to do is make the entire industry unprofitable. Again.
Excellent point and I agree completely. DL, UA, CO and US all turned in respectable results but with lower labor costs than at AA, their costs are bound to rise (and some groups have already secured huge raises). Once fuel prices rise (as they're bound to do in a recovery), the future looks bleak for all legacy carriers. Unit revenues are now back to where they were a decade ago and attempts to push them much higher probably requires a further trimming of capacity (and lower traffic volumes).