QUOTE AND NEWS
Forbes  Nov 28  Comment 
How has American traveled from bankruptcy to record breaking profits so fast? Apart from the strong demand for air travel and lower fuel prices that have helped all airlines in 2014, there are a few other factors that have driven American from...
TheStreet.com  Nov 24  Comment 
NEW YORK (TheStreet) -- It's probably not such a big deal in the ultimate scheme of things, but on Friday the American counter at Charlotte Douglas International Airport was moved closer to the US Airways counter. It was just one small moving...
The Economic Times  Nov 21  Comment 
This is the largest acquisition for Tech Mahindra and is expected to close by 4QFY2015. It will be financed through cash.
The Economic Times  Nov 20  Comment 
The acquisition wil take Tech Mahindra's total workforce to 1 lakh. The transaction is expected to close by Q4 of Tech Mahindra’s 2015 fiscal year.
TheStreet.com  Nov 12  Comment 
NEW YORK ( TheStreet) -- Trying to do a major airline merger that is labor friendly is a big challenge, something the American Airlines management team relearns each day. Obviously, an effort to provide flight attendants at the merged...
newratings.com  Nov 12  Comment 
LONDON (dpa-AFX) - The US Air Force has granted over $100 million contract to Engine maker Rolls-Royce Holdings plc (RR.L, RYCEF.PK, RYCEY.PK) to buy spare engines and parts for its C-130J fleet and to support Foreign Military Sales customers....
TheStreet.com  Nov 10  Comment 
NEW YORK ( TheStreet) -- An unanticipated labor clash once again is complicating life for the management team of  American Airlines , which had hoped that its second major merger in eight years could be viewed as labor friendly. Like the...
Forbes  Nov 7  Comment 
2013 and 2014 have been the years of change in the mileage program game. Delta started the revolution by altering the core value of earned miles. It used to be that for every mile flown, a passenger would earn one mile in their loyalty account. ...
newratings.com  Nov 4  Comment 
WALTHAM (dpa-AFX) - Raytheon Company (RTN) Tuesday received a $174.5 million follow-on contract from the U.S. Air Force to provide field support for high-altitude intelligence, surveillance and reconnaissance (ISR) and the Distributed Command...
TheStreet.com  Nov 4  Comment 
NEW YORK ( TheStreet) -- Laura Glading is a labor hero, someone who stuck her neck out to enable a merger that benefited her members and changed the face of U.S. commercial aviation. But that doesn't mean Glading, who is president of the...




 
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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