QUOTE AND NEWS
newratings.com  Jul 19  Comment 
WASHINGTON (dpa-AFX) - American Airlines Group (AAL) said that Mechanics and Related, Fleet Service, and Maintenance Training Specialists workgroups at US Airways, represented by the International Association of Machinists or IAM, ratified three...
MarketWatch  Jul 9  Comment 
Carrier says it is booking a $330-million charge on sale of fuel-hedging contracts.
Red Orbit  Jun 27  Comment 
Kathryn Hansen, NASA Anyone living in a major US city for the past decade may have noticed a change in the air. The change is apparent in new NASA satellite images unveiled this week that demonstrate the reduction of air pollution across the...
Times Online  Jun 26  Comment 
A child sent to a detention centre at a US air force base after entering the country illegally has been diagnosed...
newratings.com  Jun 19  Comment 
BETHESDA (dpa-AFX) - Defense contractor Lockheed Martin Corp. (LMT) won Tuesday a $1.86 billion fixed-price contract from the U.S. Air Force to produce two Space Based Infrared System or SBIRS, missile defense early warning satellites. Lockheed...
The Hindu Business Line  Jun 19  Comment 
Iraq has called for US air strikes on militants who attacked its main oil refinery and seized more territory in the north, putting US President Barack Obama under pressure today amid warnings the...
TheStreet.com  Jun 16  Comment 
CHARLOTTE, N.C. (TheStreet) -- US Airways and its biggest union said Monday they have reached tentative contract agreements following three years of negotiations, removing a roadblock to the labor peace that has been viewed as a cornerstone to...
Cellular News  Jun 12  Comment 
USA based Lightbridge Communications Corporation (LCC) says that it has been awarded additional Voice over LTE (VoLTE) readiness service verification projects. Click here for more.
The Hindu Business Line  Jun 12  Comment 
Iraqi officials have privately asked US President Barack Obama’s administration to weigh the potential air strikes targeting militants, a Western official has said.The Obama administration...
TheStreet.com  Jun 4  Comment 
CHARLOTTE, N.C. (TheStreet) -- US Airways pilots said they are losing out on their rightful pension benefits because they were once required to retire at age 60, but the Pension Benefit Guaranty Corp. won't pay full benefits unless they delay...




 
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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