QUOTE AND NEWS
Flightglobal  Mar 26  Comment 
The US Air Force plans to acquire 22 more Cessna AC-208s to provide to allied governments to use for lightly armed surveillance missions.
Flightglobal  Feb 16  Comment 
US air cargo company Air Transport Services Group (ATSG) still aims to receive type certification for its Airbus A321 converted freighter by 2019, says chief executive Joe Hete.
Flightglobal  Feb 1  Comment 
ANA Holdings is looking to launch a new medium-haul, low-cost carrier around 2020 as part of a greater focus on the budget market.
The Economist  Jan 26  Comment 
THE “Miracle on the Hudson”—the successful ditching of a US Airways jetliner into New York’s Hudson River in 2009 after it hit a flock of geese—taught frequent flyers two things. First, it really is possible to land an aircraft on water,...
Financial Times  Jan 17  Comment 
Energomash-Great Wall negotiations confirm predicted ‘challenge to US air superiority’
The Economic Times  Dec 20  Comment 
The Nifty50 index was trading 12 points up at 10,475, while the BSE Sensex was 44 points up at 33,880 around 1 pm (IST).
Benzinga  Dec 7  Comment 
After Wednesday’s 46.3-percent stock concession, Digital Power Corporation (NYSE: DPW) rises again. Shares popped 31 percent pre-market Thursday after the firm raised 2018 revenue guidance 50 percent from $25 million to between $36 million and...
The Economic Times  Dec 5  Comment 
The list included stocks such as Remsons Ind, LCC Infotech, Nitco, Setco Automotive, Weizmann Forex, Ramky Infra, Samtel Color
Flightglobal  Nov 20  Comment 
Avianca majority shareholder and airline investor German Efromovich has dismissed the rise of low-cost carriers in Latin America, saying he does not believe that discounters will enjoy the same sort of success they saw in Europe.




 
TOP CONTRIBUTORS

US Airways (NYSE: LCC) is a major domestic air carrier, which as of April 2008 operates 3,800 flights to 230 destinations across the U.S., Canada, the Caribbean, Latin America and Europe[1]. The company’s finances suffered considerably due to reduced air travel following September 11th, forcing the airline to declare bankruptcy in 2002[2]. However, unlike other carriers that improved and emerged stronger following Chapter 11 protection, US Airways never fully recovered. The combination of high fuel costs and tough labor negotiations forced the company into a merger with America West in 2005. While the US Airways name was maintained for brand purposes, the merger actually left America West executives and stockholders with more control over the new company[3].

US Airways has responded to the low fare revolution in domestic air carriers by attempting to cut costs and revise its route structure. The company has adopted increased point-to-point flights along the east coast and instituted fees for basic amenities (headphones, food, etc.). The airline's ability to continue to manage its costs is less certain, however. In 2008, the company's 30,000+ employees formed a coalition to demand higher wages and better benefits. Normally, airlines negotiate with their employees through separate unions (flight attendants, pilots, service workers, etc.). By forming a single body to negotiate on their behalf, the employees will be able to exercise greater bargaining power. During the same period, fuel prices reached an all time high.

Business Overview

Business & Financial Metrics[4]

In 2009, LCC incurred a net loss of $205 million on revenues of $10.46 billion. This represents a whopping 90.7% reduction in net income against a 13.7% decrease in total revenues from 2008, when the company lost $2.22 billion on $12.12 billion in revenues.

Business Segments[5]

US Airways operates through a single reportable segment. 79.2% of the company's revenue in 2009 came from flights in the United States.

IMAGE:LCC-Geography2009.jpg[5]

Key Trends and Forces

Competition from Low Cost Airlines

US Airways has long been structured as a legacy carrier; the company has existed for decades, operating a hub-and-spoke network as well as a separate regional airline. This business strategy was the industry standard until the middle of the 1990’s, when US Airways and other legacy carriers began to face pressure from low cost airlines. US Airways responded by adopting a new “Metrojet” service, which operated limited single class no-frills flights quite similar to those offered by Southwest. However, the company’s broader business model remained the same, and the “Metrojet” service proved to be short lived. Thus, the competition from discount airlines remained, forcing US Airways to search for new ways to cut costs, especially as operating profits dropped in the post-September 11th period. In an attempt to reduce expenses, US Airways moved away slightly from the hub-and-spoke structure and began offering more point to point flights. However, the high costs continued and will continue, especially with respect to labor expenses. Moreover, the company has announced plans to introduce improvements to their in-flight service, which brings into question the carrier’s ability to sufficiently reduce costs.

Increased Government Regulations

The Federal Aviation Administration (FAA), an agency of the federal government, is charged with providing oversight for airlines operating in the United States. In 2008, it was revealed that the FAA was not active enough in ensuring airline compliance with safety inspections. As a result, there has been a strong Congressional backlash, which will likely force the FAA to become stricter in guaranteeing airlines perform safety checks. [6]. While US Airways has not been forced to cancel flights in order to comply with the new demands from the FAA, the increased intensity of inspections will probably result in an enduring increase in expenses for the airline and the industry in general.

Competitors

US Airways's competitors include:

References

  1. US Airways 10K, Item 7, pg. 34
  2. US Airways 10K, Item 1, pg. 5
  3. US Airways 10K, Item 7, pg. 38
  4. LCC 2009 10-K pg. 31  
  5. 5.0 5.1 LCC 2009 10-K pg. 104  
  6. “Fliers Fume as American Airlines Grounds Another 595 Flights Friday” Fox News April 11, 2008
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