ClipperDelta

Not to mention that many of the legacy US carriers have cut costs so much that unit costs are up to 25% less than some comparable European carriers. The latter also have had the ability to tack on very significant fuel surcharges to each ticket (notice the huge disparity between the base ticket price and the 'all-in' price of the tickets I quoted above for DUS-MIA, for carriers such as KL, BA, AF, and LH).

Threy

Folks, do not have the time and especially endurance to discuss it again and again and again, but as far as I know, profits of the European legacy carriers are expect to reach record levels this year...beside that there is certain difference between offering a fare and the quantity of seats that are actually sold at this price.

I recommend Stephan Shaw " Airline Marketing and Management " 5th Edition in that regard.

I do not have the time to comment about the never ending fairy tails of hfly as well, do it from time to time on weekends. Since 50 % of the carriers here are supported by their Governments or are bankrupt, I need to hurry up to get to the airport hoping to find a carrier that actually flies.

Threy

Watch out for the currency fluctuations

Same trick was used by the LH pilots when they wanted their big pay rise and used salaries of US pilots when the $ was 30-40 % stronger than today...

Threy

I hope you provide an update...

Threy

Obviously 50 % of the European carriers are not bankrupt...obvious fairy tale...

As pointed out earlier, BA will create real value this year, IB, AF/KL and LH/LX are on the same path and are expected to have a ROIC/WACC multiple above 1 in 2008.

IB is a long shot, IMO, but at least some analysts see it this way...

Ceasy

Just to add my 2 cents...

People and businesses buy full fare J tickets ALL THE TIME. It's not a unique occurance -- I know plenty of people that purchase full fare J for leisure trips and I know plenty of small businesses that fly their employees in J on international flights. These businesses do not have contracts with major airlines and often purchase tickets close to the departure date.

I also know a few people that purchase full-fare F tickets when flying int'l. It's not nearly as common, but it proves to me that a market exists, esp ex-NYC, ex-BOS, and ex-LAX.

crazygrow

I love whenever Threy gets involved in a thread. Rarely can you see such confidence with total lack of any support while ignoring all things that go against his theories.

sxf24

I'm not sure what you're doing with fairy tails, but here are some facts.

Of the 36 Major and National US passenger carriers (as defined by the DOT), 3 (DL, NW and XJ) are currently operating under CH11 bankruptcy protection and 5 (AQ, HA, TZ, UA, US) have recently emerged. 1 (DH) has ceased operation.

Let's do the math:

8% of US carriers are currently operating under Bankruptcy protection
22% have been under bankruptcy protection within the last two years
0% of US carriers are supported by the Government

How many EU carriers receive government subsidies or have "loans" on their books that will likely never be repaid? I do not have time to do the research, but I suspect the number is higher than zero...

ClipperDelta

Yes, but their operating margins are not that impressive relative to many US carriers, and yes, even, "gasp" a bankrupt carrier such as Delta!

Here are the operating margins (operating profit / total operating revenues) for the April - June 2006 quarter for the more prominent US carriers as well as the top three European carriers:

Southwest 16.4%
AirTran 11.4%
US Airways 10.7%
BA 9.2%
Northwest 9.0%
American 8.0%
Delta 7.9% (US$369 million operating profit / US$4.66 billion revenues)
JetBlue 7.7%
Lufthansa 7.4% or 7.2%* (either Operating profit of EUR372 or 384 million / EUR 5.2 billion in sales)
Air France-KLM 7.1% (EUR411million operating profit / EUR 5.8 billion sales)
Continental 7.0%
United 5.1%

*LH reported a "Profit from Operating Activities" of EUR384m and an "Operating Result" of EUR372m

Threy

Total lack of any support ?

Basically every DL press release concerning their financial situation is more than enough support that I ever need in my whole life...

Threy

First of all, the DOT defines a major carrier after revenues of more than a billion $ per year. Watch out for the smaller carriers, cause they fly into smaller cities and receive huge financial aid operating into those cities, partly the same in Europe, but not that extent, so you see that even if we start from the very beginning, you already see the mess with your math...

No US carrier would still exist without Government support ( talking about hull insurance ) cause they would have been forced to stay on the ground after Sep.11, because no insurance company even touched them anymore. Again partly the same in Europe, but the dust settled sooner and the insurance companies realised that it is safe to insure European carriers with a certain risk premium.

And what about the cost of Air Traffic Control and how it is gonna paid in Europe vs. the US...

Not that every European flag carrier is like a virgin in terms of state aid, but the major ones are earning their costs without Government aid for a long time now.

As pointed numerous time before, we either need a level playing where everybody plays by the same rules ( defined by the WTO ) or we continue the same game. Since the US carriers are massively supported by their Government financially, I can definitely understand employees of AZ complaining about unfair market conditions on the streets of Rome or Milan...

Threy

WOW !

So you are going to compare carriers which paid all their liabilities, interest expenses etc. with a carrier or two that decided not to, which resulted in ten thousands of employees without a pension worth talking about, which resulted in hundreds of companies whch were not paid their money after providing their part of a contract with DL. You are comparing companies that dilute the market place at the expense of the US tax payer with carriers like BA, WN or LH... industry leaders in several regards...

sxf24

We're discussing TATL routes where US and EU carriers compete, not EAS service with small props. Bringing small regionals into the discussion is irrelevant (not to mention the subsidies are tiny).

Trying to tie the reimbursement of higher war risk insurance premiums to the subsidization of operations is pointless.

Again, you're trying to make a business case out of a political issue...

What a bunch of bull crap...

Threy

Who bought up the 34 US airlines ?

BTW, who is feeding legacy carrier TATL routes from small markets

Priceless...

Priceless ...again ! So all of a sudden, ATC is a political issue...

Running out of arguments ? Obviously...

You know, there is a saying about a glass house and stones. And it is not only fitting for this post, but also for the US Aviation Industry and Government support....

ClipperDelta

WOW! Your pathetic attempts at convenient amnesia are truly amazing! Where were you when US carriers were making hundreds of millions in profits every year (before 9/11) and many European carriers including current darlings BA and AF were floundering like nobody's business? Was the playing field level then? In case you conveniently forgot, even BA was pumped up to be in 'fighting shape' before the Thatcher government would let it go compete as a private company!

Your same exact text could have been applied in the 70s and early 80s when AF and to some extent BA were diluting the market place at the expense of the French and British taxpayers! How dare then that you compare those carriers to AA, UA, DL...industry leaders in several regards at that time...again, conveniently forgotten, huh?