QUOTE AND NEWS
The Hindu Business Line  Feb 19  Comment 
Lockheed Martin Corp executives said on Wednesday they were confident the company would not face capacity constraints working on both the F-35 program and a new bomber if the US Air Force chose it...
TheStreet.com  Feb 13  Comment 
NEW YORK ( TheStreet) -- The departure of US Airways Flight 767 from Charlotte to Philadelphia on Thursday was a particularly significant airport event, as the specially assigned flight number indicates. The aircraft was the last one ordered by...
Forbes  Feb 3  Comment 
Last year I had the fortune to spend some time in Iceland meeting with startups and talking with Icelandic leaders about building a technology ecosystem. As I was flying from the US to Iceland, I spent lots of time looking at the map, and reading...
Forbes  Feb 1  Comment 
A new contract for pilots at American Airlines and US Airways, which will add $650 million in annual costs, won approval from nearly two thirds of the voters and also from three quarters of the pilot union’s board.
Wall Street Journal  Jan 30  Comment 
Pilots from the two carriers that combined to form American Airlines Group approved a joint contract Friday after months of negotiations, a major step in the company’s integration as the world’s largest airline.
Forbes  Jan 24  Comment 
US Airways pilots paid a high price during the merger march of the America West management team, which now runs American, and today many of them are skeptical about a proposed new contract for American pilots.
TheStreet.com  Jan 16  Comment 
NEW YORK (TheStreet) -- The two sides in the seniority dispute between pilots from America West and US Airways have been litigating against one another for seven years, but now the end is in sight. With binding arbitration to determine a...
TheStreet.com  Jan 8  Comment 
NEW YORK ( TheStreet) -- Once again, some US Airways employees are in a position where the benefits of an airline merger are a little slow in reaching them. This time, the roughly 340 employees in question are Transport Workers Union members...
The Times of India  Dec 30  Comment 
Troubled low cost carrier (LCC) SpiceJet reportedly failed to submit a cash flow plan to the aviation ministry to show that its prospective investors mean business.
BusinessWeek  Dec 29  Comment 
The world's largest airline pushes for labor peace as it prepares to finalize a merger with US Airways




 
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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