QUOTE AND NEWS
Flightglobal  May 23  Comment 
The US Air Force has picked the Coulson Aviation USA retardant aerial delivery systems (RADS-XXL) to outfit seven former Coast Guard Lockheed Martin HC-130H search-and-rescue turboprops into firefighting assets for the Forest Service.
Flightglobal  May 19  Comment 
In talks with each other since over a year ago, eight low-cost carriers in the Asia-Pacific and Oceania regions announced on 16 May that they have formed a landmark alliance that will transform Asia Pacific s low-cost market .
Forbes  May 7  Comment 
American Airlines' pilot seniority integration faces a lawsuit by some US Airways pilots, continuing a pattern in which a series of lawsuits have been filed since the 2005 merger between US Airways and America West.
Financial Times  Apr 27  Comment 
Sharp fall reflects problems with $35bn US Air Force order
Financial Times  Apr 17  Comment 
Rush of new operators into commercial space launches
Flightglobal  Apr 5  Comment 
US air taxi company JetSuite is adding 10 refurbished, second-hand Embraer ERJ-135LR regional airliners to its fleet of 20 entry-level and light business jets, in a move to expand its branded, low-cost, point-to-point service across the USA.
Yahoo  Apr 3  Comment 
The acquisition would herald the first U.S. commercial airline merger since US Airways and American Airlines combined in 2013 to form the world's largest carrier. It would boost the size of Alaska Air's home market by allowing it to expand into...
Clusterstock  Mar 21  Comment 
As President Obama continues his historic visit to Cuba — the first time an American president has been to the Caribbean nation since 1928 — prices for direct airfare there are predicted to drop by nearly 50%. Airfare prediction app...
Flightglobal  Mar 15  Comment 
Volotea may sponsor French Ligue 1 club FC Nantes, but chief executive Carlos Munoz believes the budget carrier is in a league of its own when it comes to its business model and its rivalry with the rest of Europe's low-cost carriers.
newratings.com  Mar 9  Comment 
WASHINGTON (dpa-AFX) - A senior leader of the Islamic State of Iraq and the Levant, who is regarded as the Defense Minister of the terrorist group, has probably died in a US air strike in Syria. Pentagon Press Secretary Peter Cook said Tuesday...




 
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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