QUOTE AND NEWS
Forbes  Jun 27  Comment 
In a stunning reversal, a U.S. Appeals Court ruled Friday that the US Airline Pilots Association, which represents US Airways pilots, violated its duty of fair representation because it has failed to advocate for the 2007 Nicolau seniority award.
Reuters  Jun 26  Comment 
A federal appeals court on Friday ordered a union negotiating seniority rights of former US Airways and America West pilots to stop favoring the US Airways pilots, in a divisive...
The Australian  Jun 3  Comment 
The aviation watchdog has been forced to admit that US airports‘ ground staff give local air traffic information to pilots.
Jutia Group  Jun 1  Comment 
[Reuters] - The U.S. Air Force on Monday said it aims to meet electronic warfare needs using next-generation aircraft such as Lockheed Martin Corp's F-35 fighter and a new long-range bomber, rather than older planes like Boeing Co's EA-18G...
The Times of India  May 30  Comment 
GoAir’s woes seem to be overflowing. Tim Jordan, the chief commercial officer hired earlier this year to manage the low cost carrier (LCC), has now reportedly quit. Jordan’s quitting has come as a big blow to the LCC as he had been running the...
Financial Times  May 26  Comment 
Victory for Elon Musk as US Air Force allows his Falcon 9 rocket to compete with ULA
TheStreet.com  May 18  Comment 
NEW YORK ( TheStreet) --Speaking to an investor conference on Thursday, American Airlines Chief Financial Officer Derek Kerr seemed to say that the airline's management team, which took over in 2013, is just getting started on the changes it...
Forbes  May 16  Comment 
On Wednesday I heard some chilling words.
Yahoo  May 12  Comment 
After more than 75 years of flying, the end is near for US Airways. American Airlines plans to shut down the venerable carrier over a 90-day stretch that could begin as soon as July, which would mean a ...
TheStreet.com  May 12  Comment 
NEW YORK (TheStreet) -- In March 2007, a year and a half after they merged, US Airways and America West sought to merge their reservations systems. The result was unfortunate. The intent was to move from the US Airways Sabre system to America...




 
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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