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The Airline Industry: A “Lose-Lose” Business Model With Two Ways To Profit
“Pack your bags… it’s on.”
So says Southwest Airlines (NYSE: LUV) CEO Gary Kelly at the end of the company’s latest television commercial.
He’d better hope so. The once trend-busting airline, whose savvy fuel hedging strategy and cheap, efficient service helped it chalk up profits, even as its rivals in the airline industry were collapsing, is now coming off three straight quarterly losses, including a $91 million first-quarter drop.
And the company’s May traffic dropped 3.6% from May 2008 – the end of a five-month spell that saw the airline fly 2.2% less revenue passenger miles (which measures miles flown per paying passenger) compared…
12Jun2009 | Smart Profits Report | 0 comments | ContinuedAirline Losses Mount: Yet Another Bailout Target?
Global airline losses may total $4.7 billion this year as revenues plunge below levels seen after the terrorist attacks of September 11, 2001, the International Air Transport Association said today (Tuesday).
The revised loss estimate, nearly double the previous forecast issued in December, reflects “the rapid deterioration of the global economic conditions,” Geneva-based IATA said in a statement.
The industry body had estimated in December the airlines would lose $2.5 billion in 2009. Airline capacity could shrink 6% as carriers shed jobs, eliminate routes and idle planes to survive shrinking passenger and cargo demand sparked by the global recession.
IATA based…
25Mar2009 | Money Morning | 0 comments | ContinuedCan You Profit From The Market’s Worst Industry?
by Marc Lichtenfeld
Senior Analyst, Smart Profits Report
It can often be quite a lonely place and the investment crowd may call you all kinds of derogatory names – but when it comes to stock picking, nothing beats the feeling of striking out on your own, going against conventional wisdom and being proved correct.
And you know what? The rancor you may receive along the way is actually a good thing – as I’ve discovered at first-hand. When I wrote for TheStreet.com, the more hostility I encountered from readers, it usually meant that I was on the right track.
For example, during the height…
5Jun2008 | Smart Profits Report | Comments Off | ContinuedWith Delta and Northwest Quarterly Losses, All Five Major U.S. Carriers Start 2008 in the Red
High fuel prices are to blame for Delta Air Lines Inc.’s (DAL) and Northwest Airlines Corp.’s (NWA) first-quarter losses, the companies said separately.
For the quarter, Delta posted a net loss of $274 million, or 69 cents per diluted share. Northwest, which Delta agreed to merge with a couple weeks ago, posted a $4.1 billion loss, or $15.78 a share, which included a $3.9 billion non-cash expense and other costs.
Delta said in a statement that its fuel costs increased by $585 million year over year. Northwest phrased their pain at the pump slightly different, saying it paid $2.77 per gallon for jet…
24Apr2008 | Money Morning | Comments Off | Continued
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