Airlines losing money or bankrupt
 

I don't really understand how these companies can lose so much money in such a short period of time. If tickets were cheaper more people would fly.

How can these companies be going bankrupt or losing money?

Re: Airlines losing money or bankrupt
 

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How can these companies be going bankrupt or losing money?

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Because they're poorly managed? That's partially unfair. Notice the "old" airlines are the ones in trouble - the ones that were founded in the era of regulation. They haven't adapted. Part of that is because their unions haven't allowed them to adapt. The newer airlines without regulation-era baggage are doing OK.

Re: Airlines losing money or bankrupt
 

bad management, inability to adapt to changing conditions, poor business models, insane pricing, poor marketing, ...
[img]/images/graemlins/smirk.gif[/img]

Re: Airlines losing money or bankrupt
 

I think unions are a very minor part of it. And their inability to deal with unions goes back to the bad management ... Many unionized industries have had to adapt and change, and they managed to do it by working with the unions or overcoming it, not by going broke and crying about the "evil union".

Re: Airlines losing money or bankrupt
 

Sounds good...those are the answers I was looking for...I had no one to ask around here and I knew I could get an educated answer in the politics section.

Re: Airlines losing money or bankrupt
 

Since the beggining passenger flight has generated a negative return on capital.

Mack

Re: Airlines losing money or bankrupt
 

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I think unions are a very minor part of it. And their inability to deal with unions goes back to the bad management ... Many unionized industries have had to adapt and change, and they managed to do it by working with the unions or overcoming it, not by going broke and crying about the "evil union".

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I dunno, maybe we should pay pilots minimum wages, and have them collect the tips 5 mins before landing, 'ladies and gentlemen please come forward to the tipping area I am afraid we are currently experiencing some tubulance and 3 of our engines have stalled, thank you for flying aeroflot'.

Mack

Cutting corners
 

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The "old" airlines are the ones in trouble - the ones that were founded in the era of regulation. They haven't adapted. Part of that is because their unions haven't allowed them to adapt. The newer airlines without regulation-era baggage are doing OK.

[/ QUOTE ]

The new comnpanies are competing somewhat unfairly with the old ones in terms of maintenance and safety costs.

Do I have to elaborate?

Re: Cutting corners
 

[ QUOTE ]
[ QUOTE ]
The "old" airlines are the ones in trouble - the ones that were founded in the era of regulation. They haven't adapted. Part of that is because their unions haven't allowed them to adapt. The newer airlines without regulation-era baggage are doing OK.

[/ QUOTE ]

The new comnpanies are competing somewhat unfairly with the old ones in terms of maintenance and safety costs.

Do I have to elaborate?

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Yes, because although I agree with you much of the time, I'm not sure you nailed this one.

-ptmusic

Re: Cutting corners
 

OK.

Always within regulations, the cut-price airlines (which is what I was referring to by the term "new airlines" because the other "new" ones are just mergers) are shaving costs by getting around proper maintenance and safety precautions. They are "assisted" in this endeavor by cutting down on various supporting jobs and hiring some mechanic and pilot jocks/hot shots, who are then encouraged to engage in cowboy acts.

The Helios Airline tragedy last week was, it appears, the outcome of such practices.

The upshot (for the company) is that the plane leaves on time -- and flies cheaply.

Meantime, stodgy old foggies such as British Airways or Qantas will delay a plane for an hour making sure.

Re: Cutting corners
 

[ QUOTE ]
OK.

Always within regulations, the cut-price airlines (which is what I was referring to by the term "new airlines" because the other "new" ones are just mergers) are shaving costs by getting around proper maintenance and safety precautions. They are "assisted" in this endeavor by cutting down on various supporting jobs and hiring some mechanic and pilot jocks/hot shots, who are then encouraged to engage in cowboy acts.

The Helios Airline tragedy last week was, it appears, the outcome of such practices.

The upshot (for the company) is that the plane leaves on time -- and flies cheaply.

Meantime, stodgy old foggies such as British Airways or Qantas will delay a plane for an hour making sure.

[/ QUOTE ]

Let's at the quintessential cut-price airline: Southwest. I think it's "safe" to say (pun intended) that Southwest's success is due to far more than safety and maintenance cost-cutting.

They came up with a new strategy, which involved cost-cutting across the board (not just maintenance), but which also included different routes and airports. In effect, they created a new segment in the airline industry, and they were therefore "first mover" into that segment, an advantage in and of itself. Other airlines have tried to copy their success, but most have failed: Southwest has been able to sustain its competitive edge.

Also, to speak to your point about on time vs. delayed flights, that is another of Southwest's edges. They streamlined everything, including assigned seating, different "classes", and different meals, all adding to a speedy turnaround at the terminal.

The non-union factor is also not negligable to Southwest's bottom line.

I'm not saying the maintenance factor is negligable, but even with my fear of flying, I know that statistically, flying Southwest is pretty damn safe.

-ptmusic

Re: Airlines losing money or bankrupt
 

deregulation had a big chunk to do with it -

RB

Re: Airlines losing money or bankrupt
 

Among other reasons:

Delta has 50+ vice presidents, all of whom make a pretty hefty salary for doing dick basically. AirTran functions just as well with less than 10% as many.

Gas costs. Even a full plane of passengers with ticket prices where they are now will not pay for the upkeep and maintenance of a plane. Let alone the salaries of those flying/servicing them.

AirTran's deal with Boeing. Only this spring has AirTran started to pay for the brand new planes they got a few years ago. This means, while they were able to charge those ridiculously low fares earlier, it was because they were paying $0 in plane costs other than the minimal upkeep that a new plane requires. As their flights beame more popular, other airlines had to lower their prices. Lower their prices to the point that they weren't making money.

Also, another thing with Boeing. They give airlines $1M discounts to take their old planes out into a desert and cut them in half, rather than sell them. Delta, AA, United, etc. all uesd to sell old airlines to other carriers, but now that portion of income, no matter how small, has been minimized even more.

There's a lot more to it, but that should get you started.

Re: Airlines losing money or bankrupt
 

bump

Re: Airlines losing money or bankrupt
 

I suspect that airlines are unwilling to give up market share and would rather not cut flights during unprofitable periods because they want to maximize their share of the profits during boom periods.

My understanding is that the airline business is naturally cyclical and that companies can be expected to go through relative bust and boom periods. Airlines go broke when the bust period lasts too long or when they didn't make enough money during a boom period to absorb the losses of a bust period.

The REAL Reason........Why Airlines Lose Money.
 

If you want to know why airlines either make very little money or lose money then come to the Dallas-Ft Worth area and compare and contrast South-West Airlines and American Airlines. South-West Airlines has consistently been profitable while airlines like American have had shaky results.

So why does South-West Airlines do well while American flounders? The ***PRIMARY*** reason are the airports that the airlines use. Dallas's Love Field is a small but HIGHLY efficient airport which South-West flies out of. DFW Airport is a giant and a HIGHLY ineffcient airport which American flies out of. When you fly out of Love Field you board the plane, taxi to the runway, and leave. At DFW you board, wait, then taxi to a line, then wait, taxi some more, then wait, and eventually you leave. ALL THIS TIME ON THE GROUND COST BIG BUCKS and when your profit margins are slim you can easily lose your ass. DFW has been offering a lot of carrots for South-West to move to DFW but South-West has kept telling them to go screw themselves. They need DFW like they need a bullet in the head. As for militant unions and bad management, these are seconadary reasons for poor preformance. South-West makes a point to avoid the major hubs which results in more time on the ground.

The bottom line is urban planning for airports is terrible. It would be much better for a major metropolis to have four smaller airports then one giant MEGA airport. Doing so means less time burning fuel on the ground, quicker trips, and more satisfied customers. The problem is people hate living next to airports, much less four airports spread thoughout the area. Also, the bond holders of the major airports would scream murder if 75% of the gates wear closed so that air traffic could be spread around. At DFW, those morons built a new terminal so DFW is in a huge economic bind to find an airline that will move in to start paying rent.

The solution is for major urban areas; build four smaller airports (25-30 gates) and let the major airports die like the dinosaurs that they are. As for the bond holders, you will get screwed for your bad investment.

Re: The REAL Reason........Why Airlines Lose Money.
 

</font><blockquote><font class="small">En réponse à:</font><hr />
As for militant unions and bad management, these are seconadary reasons for poor preformance.

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Militant unions? No pilot's union has gone on strike recently. Meanwhile, they've all taken drastic pay cuts while the executives' bonuses and retirement funds go untouched.

Re: The REAL Reason........Why Airlines Lose Money.
 

Hence the word.........SECONDARY.
Look it up in the dictionary if you need to.

Re: The REAL Reason........Why Airlines Lose Money.
 

The fact you used the word secondary to describe their effect does nothing to lessen your mischaracterization of the pilots' unions as militant.

Re: Airlines losing money or bankrupt
 

Some airlines hedge fuel costs...

Re: The REAL Reason........Why Airlines Lose Money.
 

The fact you used the word secondary to describe their effect does nothing to lessen your mischaracterization of the pilots' unions as militant.
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You accuse me of mischaracterizing the "pilot's union". I say you are delusional. I challenge you to show me where I said the 'PILOT'S union' is militant. I challenge you to show me where I even used the word "PILOT" in my post. You can't... You made that up.

I said militant unions. In the airline industry the pilot's union is usually the best behaved. The steward and mechanics union seem to be the most harmful to the airline industry.

Re: The REAL Reason........Why Airlines Lose Money.
 

</font><blockquote><font class="small">En réponse à:</font><hr />
The fact you used the word secondary to describe their effect does nothing to lessen your mischaracterization of the pilots' unions as militant.
************************************************** *******
You accuse me of mischaracterizing the "pilot's union". I say you are delusional. I challenge you to show me where I said the 'PILOT'S union' is militant. I challenge you to show me where I even used the word "PILOT" in my post. You can't... You made that up.

I said militant unions. In the airline industry the pilot's union is usually the best behaved. The steward and mechanics union seem to be the most harmful to the airline industry.

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Vague statements act as a damnation of the many. If this was your actual intent, I urge you to be more cautious with your posts next time.

Re: Cutting corners
 

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Always within regulations, the cut-price airlines (which is what I was referring to by the term "new airlines" because the other "new" ones are just mergers) are shaving costs by getting around proper maintenance and safety precautions.

[/ QUOTE ]

Care to back up this vague assertion with some actual evidence or should we just shut up and believe because Cyrus says so?

Re: Cutting corners
 

[ QUOTE ]
OK.

Always within regulations, the cut-price airlines (which is what I was referring to by the term "new airlines" because the other "new" ones are just mergers) are shaving costs by getting around proper maintenance and safety precautions. They are "assisted" in this endeavor by cutting down on various supporting jobs and hiring some mechanic and pilot jocks/hot shots, who are then encouraged to engage in cowboy acts.

The Helios Airline tragedy last week was, it appears, the outcome of such practices.

The upshot (for the company) is that the plane leaves on time -- and flies cheaply.

Meantime, stodgy old foggies such as British Airways or Qantas will delay a plane for an hour making sure.

[/ QUOTE ]

Eh? Southwest is the safest US carrier with 0 fatalities since it started operation in 1974 (9.5 million flights!). No other major US carrier (nor British Airways, with about 2/3rds the flights of Southwest) can say the same.

http://www.airsafe.com/airline.htm

Re: The REAL Reason........Why Airlines Lose Money.
 

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[ QUOTE ]
As for militant unions and bad management, these are seconadary reasons for poor preformance.

[/ QUOTE ]

Militant unions? No pilot's union has gone on strike recently. Meanwhile, they've all taken drastic pay cuts while the executives' bonuses and retirement funds go untouched.

[/ QUOTE ]

Might not be a pilots union, but... Link

What is your definition of recently? Link'

Keep up to date on the CURRENT NWA strike.. Link


The problem with the airlines is above all, the unions.

The problem with the educational system in this country is above all, the unions.

A lot of problems in this country are caused by unions. I guess they are important, but they screw everyone in the end.

Re: The REAL Reason........Why Airlines Lose Money.
 

</font><blockquote><font class="small">En réponse à:</font><hr />
Might not be a pilots union, but... Link

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No, it's certainly not a pilots' union.

</font><blockquote><font class="small">En réponse à:</font><hr />
What is your definition of recently? Link'

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Post-9/11

</font><blockquote><font class="small">En réponse à:</font><hr />
Keep up to date on the CURRENT NWA strike.. Link

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...of mechanics. Actually, it's the same strike as in your first link.

Re: The REAL Reason........Why Airlines Lose Money.
 

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Might not be a pilots union, but... Link

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No, it's certainly not a pilots' union.

[ QUOTE ]
What is your definition of recently? Link'

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Post-9/11

[ QUOTE ]
Keep up to date on the CURRENT NWA strike.. Link

[/ QUOTE ]

...of mechanics. Actually, it's the same strike as in your first link.

[/ QUOTE ]

I wasn't trying to do anything but inform that there is a current strike going on with a major airline. Just because its NOT the pilots union doesn't mean unions aren't the biggest problem with the old airlines.