Turmoil in the airline industry
Sep 15, 2001 | 1:24 pm
#1
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Turmoil in the airline industry
Earlier this week, I didn't give too much weight to this rumour in the UA forum about the imminent resignation of UA CEO James Goodwin followed by significant cuts in the airline's capacity and employees (among them, replacng 20-25 744s with 777s).
However, we are now hearing of 20% scheduled cuts with 12,000 layoffs at CO and just today that NW is doing the same capacitywise fully effective 1 October.
Other countries suffer the same problem. Ansett, the 2nd ranked Australian airline was allowed to collapse by its parent Air New Zealand. Sabena could be the next to fail, and Aerolineas Argentinas will probably never fly again.
Who will be next? Where will the global airline industry be by next year?
However, we are now hearing of 20% scheduled cuts with 12,000 layoffs at CO and just today that NW is doing the same capacitywise fully effective 1 October.
Other countries suffer the same problem. Ansett, the 2nd ranked Australian airline was allowed to collapse by its parent Air New Zealand. Sabena could be the next to fail, and Aerolineas Argentinas will probably never fly again.
Who will be next? Where will the global airline industry be by next year?
Sep 15, 2001 | 9:37 pm
#3
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AA has also posted on their website (since at least yesterday) that they eventually hope to resume service to 80% of pre-Tuesday levels. Which, of course, is the "glass is half-full" way of saying, 20% service cut. I'm actually suprised the news media hasn't reported this yet.
Sep 16, 2001 | 12:53 am
#6
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Next we'll hear the likes of USAir saying they must merge with UA to survive.
The last thing consumers need is for the industry to consolidate and then emerge in the next "good" period with just 2 or 3 big players. Fares would go way up and FF programs way down.
The last thing consumers need is for the industry to consolidate and then emerge in the next "good" period with just 2 or 3 big players. Fares would go way up and FF programs way down.
Sep 16, 2001 | 1:22 am
#7
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Terenz - it is my guess Air New Zealand will go down the tubes before Christmas.
NYSE opens Monday, and boy some US aviation stocks will be savaged.
The impending military actions by the USA on middle east related targets will see oil prices soar, affecting airlines profits even more. Already, as I type this, futures prices on oil have started to spike sharply.
With CO losing apparently losing $US 30 mllion per DAY due to this crisis, the bills are mounting up faster than most of us imagine.
[This message has been edited by sendoisan (edited 09-16-2001).]
NYSE opens Monday, and boy some US aviation stocks will be savaged.
The impending military actions by the USA on middle east related targets will see oil prices soar, affecting airlines profits even more. Already, as I type this, futures prices on oil have started to spike sharply.
With CO losing apparently losing $US 30 mllion per DAY due to this crisis, the bills are mounting up faster than most of us imagine.
[This message has been edited by sendoisan (edited 09-16-2001).]
Sep 16, 2001 | 1:16 pm
#9
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Am I the only one that finds it strange that all the airlines seem to be arriving "independently" at the 20% figure?
I wonder what the industry analysis of overcapacity on a percentage basis was before this happened...
I wonder what the industry analysis of overcapacity on a percentage basis was before this happened...
Sep 16, 2001 | 1:20 pm
#10
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As this is an industry-wide problem, I suspect a government bailout is highly likely for U.S. carriers.
Sep 16, 2001 | 1:55 pm
#11
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Maybe the 20% figure is just a (conservative) estimate of how many discretionary flyers will decide they will drive or stay home for the foreseeable future. Probably by January, airlines will be re-evaluting loads and demand, and non-frquent flyers may decide it's safe to venture into the skies again.
Sep 16, 2001 | 10:27 pm
#12
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I wonder how commuter flights figure into all of this. I am thinking that a lot of cities that were barely holding onto mid-size jet service will be downgraded to commuter jet service as part of these cost-cutting strategies.