Airline Finance News - North America.

 
FREE EXCERPT

Jan 11, 2009

Most airlines are expected to report losses for the fourth quarter, prior to 2009's expected turnaround. "Airlines have cut less-traveled and unprofitable routes, but consumers continue to spend less on vacations and airfare amid the global recession," notes Dow Jones, which breaks down the prospects for five big carriers. Jan 9, 2009

Lynne Osmus was appointed by President George Bush as FAA acting administrator effective Jan. 16, when current Acting Administrator Bobby Sturgell has said he will resign. Sturgell had named Osmus, formerly assistant administrator for security and hazardous materials, as acting deputy administrator this week. She is expected to serve in the post until President-elect Barack Obama's yet-to-be-named choice for administrator is confirmed by the Senate, a process that could take some time. Obama takes office Jan. 20. Osmus has ties to the Obama transition team, serving as a liaison between FAA and Jane Garvey, the former FAA administrator who is heading Obama's transition on transportation-related issues. Osmus served as Garvey's chief of staff during the latter's term as administrator in 1997-2002. Jan 9, 2009

US Sens. John McCain (R-Ariz.) and John Ensign (R-Nev.) this week introduced legislation to abolish the "perimeter rules" that restrict flights to/from Washington National and New York LaGuardia. Federal statute prohibits flights between DCA and airports beyond 1,250 mi., though several notable exceptions have been made. A similar 1,500 mi. restriction is imposed on LGA with an exception made for service to Denver. McCain, who returned to the Senate this week following his failed presidential campaign, long has been a proponent of eliminating the perimeters and was involved actively in the passage of an exception to allow flights between DCA and Phoenix, his home city. Exceptions also have been granted for limited flights between DCA and DEN, Las Vegas, Los Angeles, Salt Lake City and Seattle. When McCain and Ensign proposed similar legislation last year, US Airways Chairman and CEO Doug Parker called the DCA perimeter rule "one of the last remaining barriers to an open and free market in the domestic airline industry" and likened it to the Wright Amendment, which imposes restrictions on flights to/from Dallas Love Field but is being phased out. Jan 9, 2009

Airlines always hold fare sales in January but this year the sales, in some regions at least, appear to be more aggressive and longer lasting than they have been in the past, as airlines desperately seek to stimulate flagging demand. In the US, carriers are offering a flurry of sales promotions and even though January discounts are an airline commonplace, these sales are broader than usual. The discounts on offer this year are good for travel as late as June in 2008, the longest-lasting January sales were for travel through to March. Jan 8, 2009

As major airlines finish releasing their annual numbers, one trend has become clear: After five straight years of gains, overall U.S. airline traffic fell in 2008. The 2.3% decline among the seven largest carriers marks only the fifth such drop in 35 years of record keeping, though analysts say traffic will likely decline again in 2009 as airlines continue to reduce capacity. Despite the sliding traffic numbers, the big U.S. carriers should post profits of about $5 billion in 2009, according to an analyst with FTN Midwest Securities. Jan 8, 2009

Wall Street analysts appear to be taking another look at the airline sector as falling oil prices and better-than-expected revenue reports have helped to lift shares 40% since the beginning of December. "These guys have just come out of the toughest times the industry has ever had to face, and the ones that are still standing are actually pretty lean," says a portfolio manager at BlueAlpha Investment Advisory in London. Jan 8, 2009

The Air Transport Association will continue to work on Capitol Hill toward a strong energy policy, says ATA President and CEO James May, including "appropriate checks and balances ... to control excessive speculation" in the oil market. In a letter to Crain's Chicago Business, May says the Stop Oil Speculation Now campaign helped focus attention on "excessive and unmonitored" speculation. "By many accounts, just the threat of regulation contributed greatly to the swift drop in price, beginning well before today's economic crisis," he writes. Jan 6, 2009

Following the lead of U.S. carriers, airlines around the world are racing to cut capacity, hoping to make this...

To continue reading

FREE SIGN UP