QUOTE AND NEWS
Flightglobal  May 24  Comment 
President Donald Trump's fiscal 2018 budget proposal calls for privatising US air traffic control starting in 2021, a move that has been advocated by the bulk of the US commercial aviation industry.
DailyFinance  May 23  Comment 
Filed under: News, Politics, White House Defense Secretary James Mattis was taken by surprise when the US Air Force dropped a Massive Ordnance Air Blast bomb, also known as the "Mother of All Bombs," on Islamic State targets in Afghanistan in...
Clusterstock  May 19  Comment 
US Air Force fighter jets escorted an American Airlines plane into Honolulu, Hawaii, on Friday after a passenger disturbance on the flight. The FBI did not immediately disclose the nature of the incident, but local CBS and NBC affiliates...
The Economic Times  May 12  Comment 
Airbus has for years been trying to convince IndiGo to look at its Airbus A-330 for longer flights but the profitable LCC remained firm to its one-type-ofaircraft business model.
The Economist  May 11  Comment 
WOULD your region care to be the next Silicon Valley? In most of the world’s technology hubs, local leaders scramble to say “yes”. But ask the question in and around Seattle, the other big tech cluster on America’s west coast, and more...
DailyFinance  May 7  Comment 
Filed under: News, US, Transportation CAPE CANAVERAL, Fla., May 7 (Reuters) - The U.S. military's experimental X-37B space plane landed on Sunday at NASA's Kennedy Space Center in Florida, completing a classified mission that lasted nearly two...
DailyFinance  May 4  Comment 
Filed under: Finance, Careers, Employment News Back in September, American Airlines celebrated the finalization of its merger with US Airways by debuting updated uniforms for 70,000 of its customer-facing employees, including pilots, flight...
Channel News Asia  Apr 30  Comment 
LOUISVILLE: A union representing 1,200 US air maintenance workers at United Parcel Service Inc  turned up pressure on the company on Sunday to settle a three-year contract dispute, saying it would seek clearance to strike. The union is taking...
The Economic Times  Apr 28  Comment 
LCC Infotech, ATN Intnl, Pan India Corp and Sharon Bio-Med were among these stocks.




 
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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