- Travel Directory

Airline News

Airline News


Saturday, June 28, 2008

Delta Adds Fuel Fee to Frequent-Flier Tickets

In the latest fee to hit the airline industry, Delta Air Lines said Friday that it planned to begin charging a fuel surcharge of up to $50 for booking frequent-flier tickets under its awards program.

Delta is not the first airline to charge a fee for previously free tickets, but it is specifically attributing the step to the soaring cost of jet fuel.

The new fee takes effect on tickets booked on or after Aug. 15. Delta will charge a $25 fuel surcharge on tickets booked within the United States, and $50 on tickets booked for travel elsewhere, including the Caribbean, the United States Virgin Islands, Latin America and other international destinations.

Jet fuel prices have risen 83.6 percent in the last year, according to the International Air Transport Association, the global industry’s trade group. Airlines have responded with a variety of fees and charges for a range of previously free features, from checking luggage to beverages.

Jeff Robertson, managing director of Delta’s SkyMiles program, said the increase in fuel was "causing considerable financial stress to Delta’s business."

He called the step "a difficult but essential decision in the face of record-high fuel costs."

"We hope this is temporary," Mr. Robertson said, "and should fuel prices subside from current levels, we will re-evaluate this surcharge."

Mr. Robertson also said Delta would introduce a "new, multitiered award program" in the next 60 days but gave no details. Industry analysts have predicted that airlines might increase the number of miles required for a frequent-flier ticket.

Many carriers are grounding planes and eliminating flights in an effort to handle their higher fuel costs, meaning that they have fewer seats. Airlines control their inventories of free seats, and generally do not disclose how many are available on a given flight.

This month, American Airlines began charging $5 to book frequent-flier tickets. Meanwhile, US Airways will charge up to a $50 processing fee for frequent-flier tickets booked on or after Aug. 6.

Northwest Airlines said it would cancel two international routes, and suspend another until spring. Northwest is dropping its flight between Detroit and Düsseldorf, Germany, and another between Hartford and Amsterdam. The airline also is suspending a flight between Minneapolis and Paris until March.

Northwest and Delta announced merger plans in April. The carriers hope to receive federal approval before the end of the year.


Labels: ,

Friday, June 27, 2008

United to lay off 950 pilots, slash fleet

UNITED Airlines, the only US carrier offering non-stop flights between Australia and the US mainland, will lay off 950 pilots and reduce its fleet by 100 aircraft as the airline industry reels from the effect of high fuel prices.

The decision by a major carrier to lay off about 15 per cent of its pilots comes as US aviation experts, including former American Airlines chief Bob Crandall, warn that at least one big airline may go under.

It also comes as a US House Committee is due to discuss a report by the Business Travel Coalition warning that airline liquidations could cripple the US economy, costing between 30,000 and 75,000 direct jobs and resulting in payroll losses of $US2.3-6.7 billion ($2.4-7 billion).

The report predicts that losses would ripple through communities, endanger businesses that depend on airlines, devastate tourism and affect businesses that rely on just-in-time freight.

It also forecasts a decline in business activity because of disruption to travel, falling tax revenues and increased government outlays in areas such as unemployment benefits.

Another study, by Airline Forecasts, says oil prices of $US130-140 a barrel could result in the loss of 75,000 to 80,000 jobs, including about 11,500 pilots.

United's announcement this week came on top of a previous announcement that it would slash fleet operations and up to 1100 salaried and management jobs to offset higher fuel bills and a weakening US economy. Those lay-offs, from a workforce of about 55,000, were in addition to 500 already announced.

The airline plans to slash domestic capacity by 14 per cent by the fourth quarter of this year and total capacity by 8 per cent.

Over 2008-09, cumulative mainline domestic capacity will be reduced by 17-18 per cent and consolidated capacity by 9-10 per cent.

This involves retiring an additional 70 older aircraft, on top of 30 already targeted, and shrinking the fleet to about 360 planes by next year.

The retirements involve all 94 of its Boeing 737s and six Boeing 747s.

"As we reduce the size of our fleet and take actions companywide to enable United to compete in an environment of record fuel prices, we must take the difficult, but necessary step to reduce the number of people we have to run our business," the airline said.

In a message to the aviators, Keith Rimer, the airline's chief pilot, said that because of the number of pilots on military and personal leave, furlough notices would be sent to more than 1400 of the airline's least senior pilots in order to cut the active roster by 950.

The carrier was talking to unions about the lay-offs and said affected pilots would be notified in mid-July. The lay-offs are due to start in September.

It also announced a plan for global co-operation with Continental Airlines that would see the latter join the giant Star Alliance and the two carriers link their networks and services.

The airlines said last week the move would create revenue opportunities, but noted it would also result in cost savings and "efficiencies".

A United spokesman in Australia said the cutbacks were unlikely to affect Australian services as most of the aircraft being grounded were Boeing 737s.

Earlier this week in Sydney, the airline unveiled new business and first-class seats it was introducing across its fleet of Boeing 747s, 767s and 777s. But a spokesman said there was no time line for that at this stage.

However, the roadshow coincides with the introduction on the trans-Pacific of new Boeing 777s by Virgin subsidiary V Australia and the arrival on the route of Qantas's flagship A380s.

The new United business cabins will feature the kind of lie-flat sleeper seats and video-on-demand systems that have been available on other airlines for several years.

Other major airlines also have announced plans in recent weeks to shrink their operations, ground older aircraft, defer deliveries of new planes on order and cut jobs.

Delta Air Lines shed 4000 jobs through voluntary buyouts.

American Airlines, Continental Airlines and US Airways Group also have announced plans for reducing their head counts and fleets.



Tuesday, June 24, 2008

Fuel costs could 'devastate' airlines

The skyrocketing price of fuel could "devastate" the airline industry and hurt the economy, according to a report from the Business Travel Coalition released Monday.

Pressured by rising fuel costs, major airlines could collapse as early as this year, the coalition said. The failure of just one airline could disrupt travel for 200,000 to 300,000 daily passengers and cause between 30,000 and 75,000 immediate job losses, said the coalition.

The failure of more than one airline could result in 100,000 job losses, said the report, particularly in such hubs as Atlanta for Delta Air Lines, Chicago for UAL Corp.'s (UAL) United Airlines and Continental Airlines' Houston.

"Already depleted cash reserves are dwindling fast, and unless the fuel crisis lessens, airlines face not the now familiar protracted restructuring in bankruptcy, but outright and immediate extinction," said the report.

Business travel would be disrupted, as would the airborne supply chain for goods like pharmaceuticals, electronics and auto parts.

Rising fuel costs hit airlines hard. Fuel expenses are expected to total $61.2 billion this year, compared to $41.2 billion in 2007, according to the Air Transport Association.

Some major airlines, such as Northwest Airlines, United Airlines, Delta and U.S. Airways, continue to operate despite filing for bankruptcy in the last several years. But the credit crisis would make it harder for a bankrupt airline to keep operating while trying to restructure its business, according to the coalition.

The lack of bankruptcy financing is part of the reason why smaller airlines like Aloha, ATA, Champion, Eos and Skybus recently stopped operating, said the report.

Analysts who cover the industry disagreed that a major carrier would crumble this year, because the airlines still have enough cash to survive into 2009.

"I think it's more likely that any large airline bankruptcies would occur next year," said Philip Baggaley of Standard & Poor's, who has assigned his lowest ratings to U.S. Airways, AirTran Airways and JetBlue Airways. "At least at current fuel prices, most of them have enough liquidity to get through several more quarters. But it could get rather more uncomfortable by 2009. Oil prices are the largest variable."

Robert Mann Jr., an industry consultant, said the airlines have enough cash to ward off collapse for this year, and that capacity cuts should help them survive.

"The cuts in flying are designed to cut cash loss and that's what I hope happens," said Mann.

Raymond Neidl of Calyon Securities agreed that the airlines have enough cash to avoid disaster in the near future, though he expects that the number of carriers will shrink through consolidation.

"Nobody's going into bankruptcy this year," said Neidl. "Airlines die slow, and they always seem to come up with the cash to keep going."

Delta plans to acquire Northwest Airlines, though the merger is yet to be finalized.


Labels: , ,

Sunday, June 22, 2008

United Airlines to require minimum stays from Oct.

United Airlines said Friday it will start requiring minimum stays for nearly all domestic coach seats beginning in October. It is also raising its cheapest fares by as much as $90 one-way.

The second largest U.S. carrier said the moves are among a number of changes, including flight and job cutbacks, it is making to combat record high fuel prices.



Saturday, June 21, 2008

Continental to join United in Star Alliance

Continental Airlines and United Airlines on Thursday announced a broad partnership to link their services worldwide aimed at cutting costs as the industry reels from soaring fuel prices.

As part of the tie-up, Continental plans to join United in the Star Alliance of carriers, the two companies said in a joint statement.

Labels: , ,

Friday, June 20, 2008

British Airways Subsidiary Begins Paris-U.S. Flights

British Airways Plc began flights from France to the U.S. with a new airline division, taking advantage of an international treaty to add services across the north Atlantic, the world's most profitable aviation market.

The first plane operated by the U.K. carrier's OpenSkies subsidiary took off at 10:49 a.m. in Paris and is due to arrive at New York's John F. Kennedy airport at 1:25 p.m. eastern time.

British Airways is adding flights even as a slowing economy and surging oil prices cause the collapse of other carriers. Chief Executive Officer Willie Walsh said yesterday that the new airline's costs will be kept low through joint purchasing with its London based parent, Europe's third-largest airline.

"While the economic climate has worsened in recent months, we believe that OpenSkies can compete effectively," Walsh said in a statement. "It has a low cost base and support from British Airways in key areas such as sales and marketing. This differentiates it from some new airlines that have failed recently which were operating in isolation."

British Airways rose 0.25 pence, or 0.1 percent, to 226 pence, paring the stock's declines this year to 27 percent and valuing the company at 2.61 billion pounds ($5.15 billion).

Business Focus

OpenSkies will initially operate from Paris Orly airport using a single Boeing Co. 757s carrying as many as 82 passengers. The aircraft have 24 business-class berths that convert to beds, with 28 seats in premium economy and only 30 in economy. Upscale seating accounts for about half of British Airways' revenue.

OpenSkies is the only airline created specifically to take advantage of the U.S-European Union treaty of the same name, which allows carriers to fly between the U.S. and any of the bloc's nations instead of just their home countries.

At least 24 carriers have failed or entered bankruptcy this year, according to the International Air Transport Association, among them business-only carriers Silverjet Plc and Eos Airlines. The industry may report annual losses of $6.1 billion, the worst since 2003, hurt by slowing economies and a 50 percent jump in oil prices in six months, the trade body estimates.

"The timing's unfortunate but BA probably have one of the better brands in the U.S.," said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin who has the U.K. airline on his focus list. "But ultimately they'll still have to generate a return."

Dale Moss, managing director of the new airline, said in a statement today that it aims to provide value, service and comfort that will "delight" customers.

Expansion Plans

OpenSkies plans to have six planes by the end of 2009, all from its parent's 757 fleet, and is considering flying to the U.S. from Amsterdam, Brussels, Frankfurt and Milan. British Airways has spent 17 million pounds on the unit, it disclosed in accounts for the year ended March 31. The new carrier got takeoff slots at Orly through an agreement with L'Avion, which also operates from the Parisian airport to New York and is the only remaining independent business-class carrier across the Atlantic.

Establishing a subsidiary in Paris is also a response to competition at British Airways' London Heathrow hub after the introduction of the Open Skies treaty in March ended a lock that it and three other carriers had on U.S-Heathrow services.

American carriers Delta Air Lines Inc., Continental Airlines Inc. and Northwest Airlines Inc. have begun Heathrow flights. The influx means capacity between the U.S. and Europe's busiest airport is up 21 percent this summer compared with a year earlier, according to London-based consultant Aviation Economics.

Defensive Move

"OpenSkies is a defensive move by British Airways," said Davy's Furlong. "It seems to be a case of "you came into my market, so I'll come into yours.""

British Airways is Heathrow's biggest carrier, with 41 percent of slots at an airport that's already operating at 99 percent of government-permitted flight capacity.

Air France-KLM Group, Europe's biggest airline, has begun flights from Heathrow to Los Angeles under the new treaty as part of a revenue-sharing partnership with Delta. Deutsche Lufthansa AG, the region's No. 2, bought a stake in JetBlue Airways Corp. in January, giving an additional partner to help steer U.S. customers to its trans-Atlantic flights. The German carrier also says it may exercise an option to buy BMI, the second biggest holder of slots at Heathrow, by the middle of next year.


Labels: ,

Thursday, June 19, 2008

Airlines face billions in losses, Senate panel told

U.S. airlines may lose as much as $13 billion in 2008 as surging fuel prices outpace fare increases, the chief of the Air Transport Assn. told a Senate committee Tuesday.

This year's financial results will be "on par" with the industry's worst ever as carriers' combined fuel costs reach $61 billion, the association's chief executive, James May, said. The record loss is $11 billion in 2002, the group said.

"I don't think anybody predicted this extraordinary jump in prices," said May, whose group represents the biggest U.S. carriers.

The updated forecast came as airlines announced more cuts Tuesday. Northwest Airlines said it would cut its capacity later this year by 3% to 4% and trim its workforce because of high fuel prices. Northwest says it has not yet finalized the number of positions it wants to eliminate.

"In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size," CEO Doug Steenland said. "This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase."

Air Canada said separately it would cut up to 2,000 jobs and reduce capacity 7%.

United Airlines earlier projected its 2008 fuel bill would hit $9.5 billion, more than $3.5 billion higher than 2007.


Labels: ,

Tuesday, June 17, 2008

Lufthansa-no talks with Austrian Airlines owner

Lufthansa has not had any talks with the state owner of Austrian Airlines about buying a stake, Lufthansa Chief Executive Wolfgang Mayrhuber said on Monday.

He added that a deal between the two - both already members of the Star Alliance - would bring little in the way of synergies.


Labels: ,

Friday, June 13, 2008

United Airlines to charge 15 dollars to check one bag

NEW YORK (AFP) - United Airlines said Thursday it will charge a 15 dollar service fee to check one bag for domestic travel on an economy ticket to help offset record fuel prices.

The new fee also will be charged on economy travel to Canada, the US Virgin Islands and Puerto Rico, said the second-largest US airline, owned by UAL Corporation.

In addition, the Chicago based carrier said it will hike the fee to check three or more bags, overweight bags or items that require special handling to 125 dollars from 100 dollars, or to 250 dollars from 200 dollars, depending on the item.

The new fees, effective August 18, apply to customers who purchase a ticket on or after Friday.

The airline previously announced a fee of 25 dollars for checking a second bag.

United estimates the potential revenue from baggage handling service fees, including those for checking a first and second bag, will be about 275 million dollars a year.

It announced exceptions to the new first-bag checking fee for passengers traveling in United first or business class, certain frequent-flyer and Star Alliance members and US military personnel traveling on orders.

Like other US airlines reeling from jet fuel prices that have nearly doubled in the past year and a soft US economy, United announced in early June it was further cutting its fleet, operations and up to 1,100 additional jobs. It also closed its budget carrier Ted.

The leading carrier American Airlines took similar action to stem losses from the fuel crisis in mid May and announced a 15 dollar for fee for the first checked bag on tickets purchased for domestic economy travel on or after June 15, and 25 dollars for the second checked bag.


Labels: ,

Thursday, June 12, 2008

Silverjet plans to resume flights after deal

Silverjet, the all business-class carrier that ceased operations 13 days ago, said Wednesday that it plans to resume flying after agreeing to be bought by Kingplace.



Sudan investigates plane fire that killed at least 29

KHARTOUM, Sudan: Investigators examined the scorched hull of a jetliner Wednesday to determine what caused the plane to veer off a runway and burst into flames, killing at least 29 people, officials said.

Labels: , ,

Wednesday, June 11, 2008

Major airlines roll back weekend fare increase

NEW YORK (AP) - A number of major airlines rolled back a weekend fare increase Monday, the first time in more than half a dozen attempts that a widespread price hike failed to take hold across the struggling industry.

Carriers declined to say whether the shift signaled concerns about falling customer demand. Still, the decision served as a reminder that passengers - many reeling from financial worries of their own - may be nearing a tipping point in terms of how much they will pay to fly.

"This could be the first sign that demand is softening," said Graeme Wallace, chief technology officer of airfare research site "Up until now, the (airlines') statements have been that they expect demand to stay high."

AMR Corp.'s American Airlines launched the $20 roundtrip increases across much of its domestic network Saturday. That move was quickly matched by many of its closest competitors, including UAL Corp.'s United Airlines and Delta Air Lines Inc.

Continental Airlines Inc. was among the carriers that matched the increase over the weekend, but it rolled back the higher prices Monday morning, putting pressure on other carriers to do the same.

Spokeswoman Julie King said the Houston carrier rescinded the increase "for competitive reasons."

Carriers are prohibited from collectively agreeing to raise or lower fares, but nothing stops them from following a rival's lead. As a result, most major airlines tend to jockey for position when filing fares to a central booking system, which is updated three times daily.

Airlines have been scrambling to cut costs and increase revenue as jet fuel prices have soared by about 77 percent more than it did a year ago.

A number of airlines recently laid out sweeping plans to cut jobs, slash flights and ground dozens of less efficient planes. Carriers hope they can push fares even higher by reducing the number of available seats in the air.

The industry has been generally successful in raising prices and fuel surcharges in recent months.

Twelve out of 17 increases have taken hold since the start of the year, with six of the successful increases coming in just the last two months, according to a FareCompare tally.

Because the airline industry is so price-sensitive, carriers typically keep airfare increases in place only if competitors match the prices on the same routes. That has prompted airlines to look for other ways to boost revenue.

American, the biggest U.S. carrier, last month raised the stakes when it became the first major carrier to say it would start charging some fliers $15 to check the first bag. The Fort Worth, Texas-based airline also raised a number of other charges.

"Even when we raised fees a couple of weeks ago, we said that wasn't the only thing we were doing, that we would still be trying to recoup fuel costs through fare increases," spokesman Tim Wagner said. "The (fuel cost) increase is so incredible, we have to find a way to pass it on."

American's new baggage charge is scheduled to take effect on tickets bought on or after June 15. The carrier last week said the $15 fee would affect fewer than one in four customers this summer and won't lengthen lines at boarding gates.

Other major carriers, many of which already charge to check a second bag, have not said they will begin charging passengers to stow a first bag in the cargo hold, although they are not ruling it out either.

"We are still studying that very carefully," said Robin Urbanski, spokeswoman for Chicago-based United, the No. 2 U.S. carrier.


Labels: ,


Virgin says sales are up thanks to T5 troubles

Virgin Atlantic claimed yesterday it was still boosting sales in the aftermath of the troubled Terminal 5 opening, with passenger numbers rising 6% last month.

The airline will announce today that it is hiring 100 extra cabin crew as it adds an extra flight to its daily London to Hong Kong service.

Virgin Atlantic said it was seeing strong sales on services to the Caribbean and the US despite a downturn in consumer confidence and rising fuel surcharges, driven by the high oil price.

"We have definitely taken market share post-T5," said Paul Charles, Virgin Atlantic's director of communications. "There is still massive demand to fly long haul to countries where the pound is strong and the dollar is weak, such as the Caribbean and the US."

British Airways, the only tenant at T5, reported a 0.7% drop in traffic last month.

However, it said its most profitable customers were still flying in large numbers, with premium sales on long-haul routes ahead of the same period last year.

Virgin Atlantic said premium sales in May were up 10% for the second successive month.

Analysts believe the airline founded by Sir Richard Branson is in a weaker financial position than its close rival as high fuel costs threaten profits across the industry.

BA achieved a profit margin of 10% last year and record pre-tax profits of £883m. Virgin Atlantic has yet to publish its results for the 2007-08 financial year.

The carrier is expected to avoid a loss despite achieving a profit of just £6.6m in the year to February 2007, when the airline market was approaching its peak.

BA and Ryanair have admitted recently that they will struggle to make a profit in the financial year as a result of a combination of high fuel costs and weakening demand. Both hope to capitalise on the collapse of weaker rivals, with the global industry expected to make a collective loss of $6bn (£3bn) if the oil price stays at record levels.

The future of another BA rival, Silverjet, was still in the balance last night as its administrators held rescue talks with three parties.

The business class carrier's administrator, Begbies Traynor, confirmed that an investment vehicle managed by Swiss management company Heritage had tabled an offer to buy and relaunch the airline.

Heritage is working with Lawrence Hunt, Silverjet's founder and chief executive, who has blamed the grounding of his airline on negative comments from financial analysts rather than the crippling surge in fuel costs.


Labels: ,

Tuesday, June 10, 2008

Korean Air, Asiana Slide Following Record Jump in Oil

Korean Air Lines Co., South Korea's largest carrier, led declines among Asian airlines after a record jump in crude oil prices boosted the cost of jet fuel.

The carrier dropped 3,000 won, or 5.6 percent, to 51,000 won as of 11:06 a.m. in Seoul trading, the biggest decline in almost three months. Asiana Airlines Inc., South Korea's second- biggest airline, lost 4.7 percent to 5,680 won.

Korean Air and other Asian carriers have raised fares, cut flights or fired workers in a bid to cope with jet-fuel prices that have doubled in a year. The cost of jet fuel, most Asian carriers' biggest expense, has surged in line with the price of crude oil, which jumped 8.4 percent to $138.54 a barrel in New York on June 6.

"Korean carriers are coming up with various measures to counter fuel cost, but that won't be enough to cover rising oil prices," said Yun Hee Do, a Korea Investment and Securities Co. analyst in Seoul. He rates Korean Air and Asiana as "buy."

Korean Air last week said it will begin levying fuel surcharges on domestic routes from July. Asiana is asking employees to take voluntary unpaid leave. Both carriers are scaling back their international services.

Other Asia-Pacific carriers also fell after the June 6 oil price jump, which was the largest ever, one day rise in dollar terms and the biggest as a percentage since June 1996.

Jet Fuel Price

Air New Zealand Ltd., the nation's largest carrier, dropped 4.3 percent to NZ$1.12 at 2:09 p.m. in Wellington trading. The airline on June 6 announced that it planned to raise fares and cut some services.

Japan Airlines Corp. fell 2.5 percent to 237 yen at the 11 a.m. trading break in Tokyo. All Nippon Airways Co. slipped 1 percent to 396 yen. Singapore Airlines Ltd., Asia's most profitable carrier, slid 2.3 percent to S$15.40 as of 11:10 a.m. in the city.

Jet fuel prices climbed 3.8 percent to $162.15 a barrel in Singapore trading on June 6. Spiraling fuel bills may cause global carriers to post combined losses of as much as $6.1 billion this year, according to the International Air Transport Association.

China Airlines, Taiwan's largest carrier, today said it will cancel about 10 percent of flights from June, becoming at least the sixth major Asia-Pacific airline to announce cuts in two weeks. The airline will axe 100 passenger services a month, spokesman Bruce Chen said by phone today.


Labels: , ,

Monday, June 09, 2008

Thai Airways cuts back on U.S. flights

Thai Airways International will halt its direct flights between Bangkok and New York starting next month because of rising fuel prices, the company said Saturday.

Thailand's national carrier said its board agreed Friday to end the direct flights July 1 and to reduce flights to Los Angeles from seven to five a week as part of an energy saving plan. It also plans to end direct flights to Los Angeles later this year, the company said.

"The change of the flight plan is to lessen the impact of the rising energy price which has affected the entire industry," the company said in a statement. "If the fuel prices goes down, we will consider resuming the direct flights."

Airlines have been struggling to contain costs this year as oil prices have skyrocketed.

Scores of start-up airlines have gone out of business because of rising fuel prices. Several major carriers have also announced they are increasing fuel surcharges or adding a baggage surcharge, reducing capacity, deferring plane orders or shedding jobs to deal with rising costs.


Labels: ,


China Airlines to cut flights amid fuel price rises

China Airlines, one of Taiwan's leading international carriers, announced Saturday it would be cutting back its monthly flights by ten percent. The move has been brought about by the pressure of rising oil prices.

The airline is to cut around 100 passenger and 50 cargo flights from June. A spokesman for the airlines said the flight reductions would remain in place until oil prices fall to "an acceptable level." The airline said however that its flights to Europe would remain unaffected.

Due to rising fuel costs, China Airlines posted net losses of almost 100 million US dollars for the first quarter of this year. That's greater than the airline's net loss for the whole of 2007.


Labels: , ,

Sunday, June 08, 2008

Weed gets airline high on possibility of cheaper fuel

If all goes well, an Air New Zealand 747 jumbo jet will take off from Auckland in September powered by fuel refined from the seed of a fast-growing weed.

The three hour test flight could mark one of the more promising - and more unusual - steps by the airline industry to find cheaper and more environmentally friendly alternatives to fossil fuel.

"We're confident that the test will go well," said David Morgan, Air New Zealand's general manager for airline operations, before leading visitors to a farm here where the weeds are being researched.

If the flight is successful, "it'll be a real milestone not only for Air New Zealand but for aviation".

The secret: oil from poisonous seeds of the jatropha tree, which grows in warm climates. For the past year, scientists here have been perfecting a process to turn the oil into jet fuel. This week, the airline announced plans to use this fuel for 10% of its needs by 2013.

Labels: ,


Silverjet attempts a remarkable return to the skies

Silverjet, the most high-profile victim of the oil squeeze in the British airline industry, is attempting an audacious comeback from administration under chief executive Lawrence Hunt.

Hunt surprised doom-mongers in the aviation business last night by announcing he had teamed up with Heritage Cie, a Swiss investment company, to make a bid for the carrier. Kingplace, a vehicle backed by Heritage, said it had lodged an offer with Silverjet's administrators, Begbies Traynor.

Hunt said he hoped to make a further announcement soon about the resumption of flights by the Luton Airport-based airline.

He said: "I am delighted to confirm that Kingplace is in conversation with Begbies Traynor about Silverjet resuming operations in the near future. As CEO of Silverjet my aim is to see Silverjet up and flying as quickly as possible."

Ian Ilsley, chairman of Heritage, said he was "excited" about acquiring Silverjet and "investing in the future development and success of the brand". Begbies Traynor could not be reached for comment.

Meanwhile, US carrier Continental brought the number of job cuts in the American airline industry so far this year to nearly 22,000 yesterday by announcing the cutting of 3,000 jobs and the grounding of 67 planes.

United Airlines and American Airlines have made similar announcements in recent weeks.




Travel agents to continue Airblue's boycott

KARACHI: Travel agents across the country have stopped selling tickets for private airline Airblue, and will continue to do so until the airline pays agents commissions.

Travel agents have said that Airblue had raised both the rate of its principal fares the amount of fuel surcharge tax to be paid, directly reducing their commission.

They added that they previously used to earn seven to nine percent commission on basic fares but owing to the change in prices, this fee would be reduced to only a few hundred rupees. Travel Agents Association of Pakistan Chairman (TAAP) Naeem Sharif said that Airblue's recent decision targeted travel agents and would not benefit customers in any way, which had prompted the boycott.

Sharif added the decision went against the rules of the International Air Transport Association (IATA) and CAA.

Airblue Managing Director Nasir Ali told Daily Times that the management had reduced travel agent commission by two to three percent, from a maximum level of 10 percent, to absorb the impact of high fuel prices. He said the phenomenal rise in jet fuel prices plunged airlines into financial crisis, and therefore they have asked travel agents to share the burden rather than passing it on to the passengers.


Labels: ,

Saturday, June 07, 2008

Budget carriers pledge no increases

Australia's budget airlines say they'll continue to offer ultra-low fares despite the rising price of fuel, which now accounts for nearly half their running costs, up from about 20 per cent 18 months ago.

Jetstar and Tiger are the kings of the below-$50 cheapies (although Virgin Blue occasionally joins them in sale periods) and they're not about to alienate bargain hunters.

Labels: , ,


Aeroflot says interested in Austrian Airlines

Russian airline Aeroflot confirmed on Friday it could be interested in taking a stake in Austrian carrier Austrian Airlines.

"We are studying the situation at Austrian Airlines and are looking at what happens," Valery Okulov told Austrian magazine Format. "We have experience of overhauling airlines."

The Russian airline has previously said it is interested in buying European rivals.

"Okulov said yes, we are interested. But there are no practical consequences to that yet," Lev Koshlyakov, Aeroflot's deputy general director, told Reuters.

German airline Deutsche Lufthansa said last month it was also interested and Chief Executive Wolfgang Mayrhuber told Format an approach would depend on the owners of Austrian Airlines. The Austrian state holds a stake of some 43 percent.

"(Any move) must be friendly," he said. "It must make sense for both sides. But it's not our decision if talks are to take place with Austrian Airlines or not."

The magazine also quoted Air France Chief Executive Jean-Cyril Spinetta as saying he was "observing the situation" at Austrian Airlines. However, he added that Italy's Alitalia had priority for the French company.

On Monday, Spinetta did not rule out restarting talks over a possible takeover of Alitalia, but said they would be difficult. It was not clear when he had spoken to Format. No one at the magazine could immediately be reached for clarification.

Aeroflot and Air France have both been reported previously as potential suitors for the Austrian company.


Labels: , ,

Friday, June 06, 2008

Air New Zealand raises fares

Air New Zealand, the nation's biggest carrier, will raise fares on domestic and international flights an average 4% and cut some services because of higher jet fuel costs.

Labels: ,


Qantas cuts flights and sacks staff

Qantas has slashed its services to Japan and replaced some of its full service operations to Southeast Asia with Jetstar flights as part of a new cost cutting drive aimed to combat the rise in fuel costs.

Labels: ,


Continental becomes latest U.S. airline to cut service

Continental Airlines said Thursday that it would cut 3,000 jobs and retire 67 Boeing aircraft from its fleet, becoming the latest airline to announce capacity reductions in the face of high prices for jet fuel.

Labels: ,

Thursday, June 05, 2008

Fliers in for pain as airlines pack it in

The USA's air-travel map is shrinking fast, dropping scores of routes and flights that airlines simply can't afford anymore in a world of $130-a-barrel oil.

A USA TODAY analysis of fall airline schedules shows the nation's most popular vacation destinations will be among the biggest air-service losers. Many flights to Honolulu, Orlando, Las Vegas and other favorite vacation venues have vanished or will soon because cheap tickets bought by tourists don't cover the cost of getting there.

Travelers who fly among the USA's biggest business airports - such as New York LaGuardia, Chicago O'Hare and Dallas/Fort Worth - will probably see the fewest changes, because there's ample demand and fares are high.

Labels: ,


No-frills carriers can weather the storm, says easyJet

Budget airlines will be the biggest victims of soaring fuel costs as fares rise across the industry, the global aviation body warned today.

The head of the International Air Transport Association warned passengers that the era of cheap air travel, spurred by the no-frills carrier phenomenon, will be ended by the oil price spike. The fuel bill for the global airline industry could rise by $50bn (£25.5bn) this year and has put businesses in "emergency mode", said Giovanni Bisignani, Iata chief executive.

Echoing recent comments by British Airways chief executive, Willie Walsh, Bisignani said low-cost airlines face the greatest shock because their business models rely on cheap fares.

"When you add $50bn to the bill, somebody has to take care of the cost. Clearly the fare will have to reflect a cost structure that is different. In this picture, the low-cost carrier will be more affected," he said. Bisignani added that fuel represents 50% of costs for some no-frills carriers, such as Ryanair, while it accounts for 34% of the cost base among Iata members.

In response, Toby Nicol, director of communications at easyJet, said Bisignani represented "vested interests" because Iata is the global body for traditional network carriers such as BA, Air France-KLM and American Airlines. Ryanair and easyJet, in keeping with their low-cost ethos, refuse to sign up to Iata, which charges a membership fee. Nicol added that the biggest casualties in the UK airline market are business class-only carriers. Last week, Luton-based Silverjet joined Eos and Maxjet in closing its operations.

"Those airlines are the polar opposite of easyJet. They are high-fare and long-haul, whereas we are low-fare and short-haul." He added that carriers with the most cash and least debt on their balance sheets, led by Ryanair and easyJet, are more likely to survive the high oil price and weak consumer demand squeeze.

"Those people who have the cash to ride out the storm will be the winners and those who don't will be the losers."

EasyJet said rising fuel costs will benefit short-haul operators because the fuel cost passed on to the passenger is much lower. For instance, fuelling a BA return flight to Miami cost around £60,000 per journey when oil was at $80 per barrel. At $135 per barrel, the cost has climbed to £100,000, which equates to an increased fuel cost of around £133 per passenger. By contrast, the cost in fuel of flying from Luton to Alicante and back with easyjet has doubled to around £20 over the same period, easyJet said.

"If you want a week in the sun, with easyJet you will be paying around £20 per return in fuel costs. If you want to go to the US, you are looking at paying between £180 [for San Francisco] and £130 per person."

Today, a barrel of US crude oil was trading at $126.27.


Labels: ,


United Airlines cuts 100 planes

US carrier United Airlines is to ground 100 of its planes and cut between 900 and 1,100 jobs, in addition to 500 already announced lay-offs.


Wednesday, June 04, 2008

Ryanair to ground tenth of fleet

Ryanair said Tuesday it will ground up to 10 percent of its fleet over the winter because of rising airport charges.

Ryanair has complained to OFT about its ongoing row with the UK's Advertising Standards Authority.

The Irish budget carrier claimed it would be more profitable to keep 20 of its planes on the ground at airports in London and Dublin.

The announcement came despite Ryanair unveiling a 17 percent rise in pre-tax profits to €528 million ($818 million) in the first quarter of 2008.

The airline's CEO Michael O'Leary blamed the decision on the "unjustified" doubling in landing and handling charges levied by the British Airports Authority and higher charges at Dublin Airport.

O'Leary said the low-cost carrier would break even if oil prices remained at $130 a barrel for the remainder of 2008.

"The over-riding concern for airlines, passengers and investors currently is the irrational price of oil," O'Leary said in a statement.

In spite of a 20 percent rise in passenger numbers, O'Leary has imposed a pay freeze on himself and Ryanair's top 36 managers.

The airline has faced a difficult year so far.

In April, the British advertising watchdog the Advertising Standards Authority referred Europe's leading low-cost carrier to the Office of Fair Trading over allegations it was giving customers misleading information on its Web site.

Two months earlier, Ryanair had to pay compensation to the French President Nicolas Sarkozy after using a photo of the French leader and his wife Carla Bruni without permission in an advert.




Airlines Forecast to Lose $6.1 Billion in '08

Airlines may report combined losses of $6.1 billion this year, the worst since 2003, as spiraling fuel costs and slowing economies wipe out earnings.

The International Air Transport Association, whose members account for 93 percent of international traffic, cut its forecast for the fourth time in nine months at a meeting in Istanbul yesterday after oil prices rose 42 percent in six months. Airlines had a profit of $5.6 billion in 2007, the first since the 2001 terrorist attacks.

"Just as we start to recover, we face another crisis of potentially even greater dimension," IATA chief executive Giovanni Bisignani said at yesterday's annual meeting. "Skyrocketing oil prices are changing everything."

More than a dozen carriers have collapsed in the past six months. British business-class operator Silverjet is the latest casualty, grounding its planes last week after running out of cash. Long-haul budget carrier Oasis Hong Kong Airlines; Columbus, Ohio based Skybus Airlines; and Frontier Airlines Holdings of Denver also failed in recent weeks.

IATA based its $6.1 billion loss estimate on an oil price of about $135 a barrel, equal to the record level reached May 22. The 230 member group's official forecast is for a loss of $2.3 billion, based on a consensus oil price of $107. The group forecast a $4.5 billion profit as recently as April 1.

"This really reflects the whole state of the industry," said John Strickland, director of aviation specialist JLS Consulting in London. "It shows the way in which the industry can rapidly turn from profit to loss. If you look at some of the other forecasts of oil at $200 a barrel, then I think it's more likely to be worse than IATA's projections."

Airline losses since the Sept. 11, 2001, terrorist attacks have totaled more than $36 billion, led by a $13 billion deficit the year of the attacks. The loss in 2003 was $7.5 billion.

Bisignani said the situation facing the airline industry today is "grim," with oil prices obliterating the benefits of a 19 percent increase in fuel efficiency and an 18 percent fall in non-fuel unit costs since 2001. Traffic growth is likely to slow to 3.9 percent this year, compared with 7.4 percent growth in passenger traffic in 2007, he said.

Mergers won't be sufficient to safeguard earnings unless carriers also cut seating capacity, Steven Udvar-Hazy, chief executive of International Lease Finance, the world's biggest aircraft lessor, said in an interview.

"Either airlines themselves have to reduce capacity or find ways to come together and figure out a better way to handle supply," Udvar-Hazy said. "There's a false premise in the U.S. that consolidation will solve problems."


Labels: ,

Tuesday, June 03, 2008

Big airlines could levy budget charges

Traditional airlines such as British Airways and Australia's Qantas could join their low-cost rivals in charging passengers for baggage check-in and food amid soaring oil prices, a leading industry executive warned today.


Monday, June 02, 2008

Over 3,000 Delta employees take severance

Delta Air Lines Inc. is cutting at least 1,000 more jobs than it previously planned because the number of employees who accepted voluntary severance offers exceeded the company's goal.

A spokeswoman for the Atlanta-based carrier, Betsy Talton, said Friday that more than 3,000 people took the package, and Delta will accept all of the volunteers.

Delta said on March 18 that it would offer voluntary severance payouts to roughly 30,000 employees - more than half its work force - and cut U.S. capacity by an extra 5%.

Executives said then that the airline's goal was to cut 2,000 frontline, administrative and management jobs through the severance program, attrition and other initiatives.

Talton also said at the time that the company would accept more job cuts, if more than 2,000 employees took voluntary severance.

"We'll be working through plans to ensure our operations are covered and there could be future hiring for operational needs, depending on capacity needed," Talton said Friday in an e-mail to The Associated Press.

One part of the severance program was for employees who were already eligible for retirement, or for those whose age and years of service added up to at least 60, with 10 or more years of service. The other part of the program was an "early-out" offer for frontline employees - such as flight attendants and gate and ticket agents - with 10 or more years of service and for administrative and management employees with one or more years of service.

Besides severance payments, employees who take the offers are entitled to travel privileges and additional benefits to manage career transitions.

Delta had 55,044 total full-time employees as of the end of last year. Excluding the current round of cuts, Delta has announced it would cut up to 33,000 jobs since 2001.

Several major airlines in recent months have announced they are cutting domestic capacity, deferring plane orders or shedding jobs because of record fuel prices, which are currently near $130 a barrel. To top of page


Labels: ,


US Airways is among vulnerable airlines

When their efforts to buy Delta Air Lines failed 14 months ago, US Airways executives returned their attention to a long list of challenges, from union negotiations to a new reservations system.

Those may turn out to be minor compared with the looming financial crisis the Tempe-based airline faces as it moves on after the collapse of merger talks with United Airlines last week.

An unprecedented spike in oil prices, combined with a weak economy, threatens to send several carriers to the brink of bankruptcy or liquidation by the end of this year or early next year, analysts say.

US Airways is seen as among the most vulnerable of the major airlines, given its relatively small size, route network and limited assets to sell to raise cash.

One analyst last week listed US Airways among three carriers with "very large" losses forecast for this year and next.

Last month, another rated US Airways as having the highest bankruptcy risk among the major airlines.

Chief Executive Officer Doug Parker saw a merger with United as both airlines' best chance of weathering the storm, given the flight cutbacks, cost cutting and new sales opportunities that come by combining two airlines.

US Airways and America West saw early financial success and a soaring stock price after their 2005 merger.

With the United deal out as an option and no other merger talks on the horizon, US Airways now must move quickly to prepare for the unforeseen reality of exorbitant fuel prices.

"They need to batten down the hatches and look to do some of the same things everyone else is doing," said Jim Corridore, airline-equity analyst for ratings agency Standard & Poor's.

American, for example, recently announced that it plans to cut seat capacity by 11 to 12 percent and ground planes after the busy summer travel season, a move likely to impact thousands of employees. It is also the first airline to start charging for the first checked bag, effective June 15.

Hardly a day goes by without an airline's announcing a cost-cutting or money-raising move to offset the staggering impact of fuel.

In addition to flight cutbacks, airlines are deferring aircraft orders, increasing fees on everything from pets in the cabin to unaccompanied minors and adding new fees such as American's first-checked-bag charge.

US Airways executives, who declined to be interviewed, have already trimmed the airline's flights in the second half of the year but nothing to the extent of American.

They have started selling prime window and aisle seats and today stopped serving pretzels and snack mixes on U.S. flights.

The airline has repeatedly told employees in recent months that the fuel crisis dictates a new way of doing business.

Parker reiterated that again in a memo to employees Friday confirming the end of merger talks.

"We are working a number of initiatives, and you'll hear more about them in the weeks and months ahead," he said.

On the revenue side, US Airways is said to be seriously considering charging for soft drinks ($3) and pillows and blankets ($5 apiece.)

United CEO Glenn Tilton sounded similar, although more ominous, themes in his message to employees Friday announcing that a merger was out for United.

He said the U.S. airline industry is facing a $20 billion increase in its fuel bill, with United's portion $3.5 billion.

"It's clear that the status quo is not sustainable," Tilton said. "The magnitude of the challenge the industry faces demands unprecedented change."

He said the airline had already taken significant steps, including grounding 30 aircraft, and reducing capacity by 9 percent in the fall.

"That said, we must do more, and that work is under way," he said.

Corridore said the industry needs to shrink the number of available seats by about 25 percent if oil prices stay where they are.

Ray Neidl, airline analyst with Calyon Securities, puts the figure at 20 percent of domestic seat capacity and notes that that's the equivalent of all the seats US Airways, Continental and Frontier have in the United States, combined.

Parker doesn't paint as bleak a financial picture for US Airways as analysts do. He has repeatedly said the airline is sitting relatively pretty, given its $2.4 billion in unrestricted cash at the end of the first quarter and refinancings that pushed its major debt repayments into the future.

"We have more cash relative to size than most of our peers and have fewer obligations coming due in the next few years," he told employees in the memo Friday.

Still, others are concerned.

Credit ratings agency Fitch Ratings last week downgraded the airline's debt ratings, among other airlines'. The firm said US Airways is more sensitive to swings in the price of jet fuel because its trips are shorter than many of its competitors, estimating that each 10 cent change in the per-gallon price represents another $120 million in annual operating costs.

Fitch said the airline has less flexibility in its pilot union contracts to cut capacity this year.

Others say US Airways has fewer options for raising money. According to JP Morgan airline analyst Jamie Baker, US Airways' biggest assets are Embraer regional jets (estimated at $65 million to $70 million) and airport landing and takeoff slots in the Washington, D.C., area (less than $75 million).




Virgin turbulence on fuel

Virgin Blue is set to become a bigger thorn in the side of its 62.7% owner Toll Holdings, with one broker warning the airline is not only losing money, but could need an injection of funds if fuel prices remain at current levels.

UBS's research arm has slashed its forecast for Virgin of $60 million net profit next financial year to a $40 million loss, warning the carrier's capital position could become "strained" if jet fuel prices remain at about $US160 a barrel.

Labels: ,

Sunday, June 01, 2008

United Airlines, US Airways drop merger talks

United Airlines and US Airways said Friday they have stopped discussing a possible merger and will go it alone, doing business in an onerous economy with crude oil in the $130-a-barrel range.

The nation's second and fifth largest airlines began talks in late April, after Continental Airlines had rejected United Airlines' merger overtures. The three airlines had been weighing consolidation as an option since mid April, when Delta Air Lines and Northwest Airlines proposed a deal that would create the world's largest carrier.

Glenn Tilton, the chief executive of United Airlines, and his counterpart at US Airways, Doug Parker, both wrote statements to their employees on Friday saying consolidation will not take place "at this time."

Tilton said the deal was dropped "due to issues that could significantly dilute benefits from a transaction."

"The U.S. (airline) industry is facing a $20 billion increase in fuel (prices), and United, at current prices, is looking at a $3.5 billion increase over last year," Tilton wrote. "It's clear that the status quo is not sustainable. The magnitude of the challenge the industry faces demands unprecedented change."

United is the dominant carrier at San Francisco International Airport with 48 percent of the flights, and employs 10,000 people in the Bay Area.

US Airways' Parker wrote, "It is simply unlikely that anything will happen in 2008 as our industry continues to struggle with how to function in a world" with crude oil costing $130 a barrel.

Both executives remain advocates of consolidation in the airline industry, and thus left a door open.

They gave no reason for breaking off talks, but analysts believe a merger would be too problematic. The announcement almost certainly means there will not be another attempt by major airlines to merge before year's end.

There is a perception that the Justice Department of the Republican administration of President Bush would be more accommodating to a merger than would the department in place during a Democratic administration. Even so, Bush was in office in July 2001, when the Justice Department said it would oppose the first United-US Airways merger attempt, saying it created a near-monopoly on approximately 30 routes.

Henry Harteveldt, the airline analyst at Forrester Research in San Francisco, said Friday that he thinks it is a good thing for United to be pursuing independence for now. "A merger with US Airways would not have solved United Airlines' problems. It would not bring much to the table that United cannot do on its own," said Harteveldt.

"The products and the cultures are so different that had the two airlines merged, it would have been extremely problematic and potentially cost the airline business as corporate clients and others avoided traveling on the airline until things got sorted out," he said.

Harteveldt said United now "has to work on ways to grow its revenue and develop ways of serving more customers who are willing to pay the prices United will have to charge to earn a profit."

U.S. passenger and cargo airlines spent $16.4 billion on fuel in 2000 and $41.2 billion in 2007, and will spend a projected $61.2 billion in 2008, according to the Air Transport Association in Washington, D.C., representing the major carriers.

Six carriers have gone out of business since December: MAXjet, Big Sky, Aloha, ATA, Skybus and Eos. A seventh, Champion, quit business Friday and an eighth, Air Midwest, is to fold June 30. A ninth, Frontier Airlines, filed for bankruptcy protection April 11 but continues operating.

A British all-business airline, Silverjet, that served Newark, N.J., ceased flying Friday as well.


Labels: , ,


Return flight to bankruptcy possible for U.S. airlines

ATLANTA - Airlines are cutting U.S. flights, shedding employees, putting off plane orders and even talking about combinations.

But with cash bleeding fast, fuel prices high and credit tight, nothing they do may be able to stop several major airlines' return flight toward bankruptcy, and possibly liquidation.

Unlike when four of the six legacy carriers filed for bankruptcy protection between 2002 and 2005, airlines facing bankruptcy in this climate may find it tougher to reorganize because of tight credit markets and they have fewer unencumbered assets to use as collateral for loans.

"It may be Darwin's law of the fittest. If one of the carriers goes into bankruptcy and liquidated, it would take a lot of seats out of the market and other carriers would benefit," Calyon Securities airline analyst Ray Neidl said.

A handful of small carriers in recent months have filed for bankruptcy protection or gone out of business altogether.

With losses piling up for most of the major airlines, maintaining a strong cash position is important to avoid the same fate.

Spiralling fuel costs and limited means to trim other costs quickly makes that a tricky proposition.

"Unlike 2002, 2003, 2004, when it was largely a revenue problem that drove them into distress, this is largely a fuel price problem," said Fitch Ratings analyst Bill Warlick. "You could argue that the risk associated with fuel price spikes is largely uncontrollable in contrast to the revenue problem post 9/11, which was addressed through a variety of measures such as cutting costs."

Several of the carriers used their first trip through bankruptcy protection to wipe away debt, resize their fleets and terminate employee pensions.

"There are fewer opportunities to restructure now that the initial work is done," Warlick said.

American Airlines, the largest U.S. carrier, teetered on the verge of bankruptcy before winning employee concessions in 2003. Because of high pension and debt obligations, as well as the hefty price of fuel, the unit of Fort Worth, Texas-based AMR Corp. is again facing the possibility of a future cash crunch.

It had US$4.5 billion in unrestricted cash at the end of March, but Neidl projects that AMR could have a negative cash balance by the end of 2009 if oil prices remain at the current level of roughly $130 a barrel. Covenants on some of American's debt require the airline to maintain at least $1.25 billion in unrestricted cash at the end of each quarter through at least the middle of next year.

At the current fuel price level, Chicago-based UAL Corp., parent of United Airlines, and Tempe, Ariz.-based US Airways Group Inc., both of which have had trips through Chapter 11, also face the potential for precarious cash positions by the end of next year, according to Neidl's projections. Fitch Ratings said Thursday that US Airways would face a growing risk of violating one of its debt covenants if adverse fuel trends persist through the remainder of this year.

The debt covenant issue wouldn't necessarily force a bankruptcy filing, as airlines could re-negotiate debt agreements with lenders or sell assets to pay off debt. Neidl believes airlines would take drastic actions before the end of 2009 if current fuel trends continue.

Having few assets that aren't already being used as collateral on existing loans and the tight credit markets could make it difficult for US Airways, for instance, to raise financing to allow it to reorganize in bankruptcy if it had to file for the third time since 2002, Warlick said, adding that under those circumstances liquidation could result.

US Airways declined to make an executive available to discuss the airline's financial situation.

Atlanta based Delta Air Lines Inc. and Eagan, Minn. based Northwest Airlines Corp., which are seeking to combine, had a combined total of $5.8 billion in unrestricted cash at the end of March, but at current fuel prices Neidl projects that could dwindle significantly by the end of next year. Delta also has said it expects to incur $1 billion in one-time integration costs from its acquisition of Northwest. Both Delta and Northwest exited Chapter 11 bankruptcy protection just last year.

Neidl's cash projections include unrestricted cash and short term investments, but exclude auction-rate securities.

The airlines are furiously trying to remove domestic flights from the air to reduce costs. At least two have announced plans to cut U.S. capacity by double digit percentages and trim thousands of jobs. Others are putting off buying certain new planes.

The price of oil has doubled in the last year. But fare increases have fallen well short of keeping pace with the price of fuel. As their finances have been buffeted, stocks of most major airlines have plummeted by double digit percentages over the last year.

"Obviously, there are things that are outside of our control," said Beverly Goulet, American's vice-president of corporate development and treasurer. "The first thing that comes to mind is the price of jet fuel."

But Goulet said American, by cutting U.S. capacity, imposing new fees on travellers and taking other measures, has been working hard to position itself to remain viable in the current economic and fuel environment. The airline currently isn't considering bankruptcy.

"It's an interesting reflection on perceptions out there to hear people talk about the benefit of walking away from obligations," Goulet said. "Would it be easy to walk away from debt? Yes. But as a manager of this business, as people who take on obligations to those stakeholders, we don't think that's the appropriate way to think about those kinds of tactics."

Goulet said the airline industry will have to change in the face of persistently high fuel prices, and she insisted American doesn't plan to give up.

Neidl said in a recent research note that mergers, which are supposed to make the industry more efficient, may not work in the current environment because there is a large cash outlay up front and high execution risk. He believes the current crisis, which he described as the biggest challenge the industry has ever faced, may serve to cool the merger frenzy.

For their part, Delta and Northwest insist they are pushing ahead with their plans to combine in a stock swap deal that would create the world's largest carrier, and officials dismissed speculation by some analysts that Delta could possibly walk away from the deal. United and US Airways had been discussing a possible combination of their own, but on Friday the companies said there won't be an agreement "at this time."


Labels: , ,

Home |  About |  Contact |  Disclaimer |  Privacy Policy |  Sitemap |  Travel Merchants |  Add a travel site |  Advertise Copyright - Travel Directory | All Rights Reserved