More depressing news out of the airline industry the past couple of days as cost-cutting measures continued. We continue to expect that, for some airlines, this trend will end in bankruptcy.
United Airlines (UAUA): The airline’s 2008 fuel bill will likely be $9.5 billion, a jump of more than $3.5 billion from last year (which explains why UAUA recently said it will ground 100 jets and cut its work force). Unfortunately, these moves will still lead to “significant noncash charges in the second quarter.”
NorthWest Airlines: (NWA): Like United, NWA will also be grounding planes due to high fuel prices and weakened demand.
AirTran (AAI): AAI will reduce seats by 5% starting in September. AirTran also warned investors that the amount taken in for each seat flown a mile (unit revenue) will grow no more than 2% for Q2, compared with a previous estimate of 5%-6% growth.
American Airlines (AMR) et al Can Avoid Bankruptcy…Unless Oil Goes to $150 (AMR, UA
Airline Industry Finally Admits It Is Screwed: Can United (UAUA), American (AMR), and Delta (DAL) Survive? (AMR, UAUA, LCC, CAL, DAL)
Southwest: Still Smarter Than All The Other Airlines (LUV, AMR, UAUA, CAL, DAL, LCC)