Welcome, Guest. Please login or register.
Did you miss your activation email?
December 21, 2014, 01:54:30 AM
Home Help Login Register      
News: NEW Follow LiveATC updates on Twitter and Facebook


+  LiveATC Discussion Forums
|-+  Air Traffic Monitoring
| |-+  Listener Forum (Moderators: dave, RonR)
| | |-+  4 airlines go down!!! How many more? Whats to blame?
« previous next »
Pages: [1] 2 Go Down Print
Author Topic: 4 airlines go down!!! How many more? Whats to blame?  (Read 7049 times)
NAplaya16-ATC
Full Member
***
Offline Offline

Posts: 151


« on: April 05, 2008, 12:41:15 AM »

So far this week the world has seen Aloha, Champion, ATA, and Skybus annouce that they are going under and stopping all passenger ops!    This is scary to all aviation industry!!   However, can we expect more to fall down the hill?  and if so, what airlines out there do you all out there think will go under next?   

My other concern/question is that, what or who can we blame this on?  I mean, i know it's really a combination of many factors that could lead to events such as this, like passenger turnout, the economy, the war, oil companies charging high prices, inflation, etc.  but what do you all think is the main cause of 4 airlines, in one week, announcing their stoppage of service? 

any thoughts or opinions are welcome!!

-NAplaya
Logged
athaker
Sr. Member
****
Offline Offline

Posts: 288



« Reply #1 on: April 05, 2008, 02:14:57 AM »

Well one of many many reasons, in the midst of this complicated subject, as far as Champion is concerned, is that flying only 727's just can't hold up.  It's like these guys sitting in traffic in big Hummers around LA even while gas prices are kissing 4 bucks.

You can't help but think Boeing is secretly enjoying the fact that many larger airlines are going to need to dump the older guzzlers and invest in the newer, more efficient 737s and 787 to keep long term costs down.
« Last Edit: April 05, 2008, 02:17:03 AM by athaker » Logged
BMT
Newbie
*
Offline Offline

Posts: 49


« Reply #2 on: April 05, 2008, 12:36:56 PM »

I live in Deltona FL and as of 12:34, my Mode-S box is showing 98 commerical aircraft in my area.

Can all of these A/C be carrying a profitable load??

BMT
Logged

Electronic Stalker
aevins
Sr. Member
****
Offline Offline

Posts: 253



« Reply #3 on: April 05, 2008, 01:18:42 PM »

It is not as fundamental as one having one main cause. The US economy in all sectors is struggling and the airline industry is one of the most fragile. The unfortunate realities with these carriers was in no way a surprise, and was generally expected for some time. When the economy is in such a state business in general suffers and there is less business travel. On the leisure end, people just don't travel as much because they do not want to spend the money. Now combine decreased passenger turnout with rising fuel costs and increased contracting costs (food, cleaning, etc.). The revenue generated from one passenger flight is substantially less than most people think and when flights are not filling up, especially for smaller carries, it is financially unfeasible to stay afloat. Don't forget taxes, operating costs, landing fee's, etc. What airlines are at risk, you ask. Well, to be blunt, all airlines are at risk. Not necessarily for ceasing service, but airlines in general are just not gaining the revenue they once did. System wide you will start to see routes being discontinued, employees being laid off, and labor unions agreeing to pay concessions. Carriers who file Chapter 11 are increasingly less likely to emerge from it. But more specifically smaller not well established carriers who don't have a good fuel contract and fly to out of the way cities are the most at risk (i.e. Skybus). Smaller carriers that operate code share flights for legacy carriers tend to be more secure because they continue to have passengers 'funneled' to them. This is not a complicated issue to understand and cannot realistically be blamed on any individual or group of individuals (I am not saying that the government did not play a role in our current economic state). Over the past few days I've heard individuals throw around the idea of a conspiracy by the government, which is a ridiculous assertion. If you want to understand what the economy is doing and how it effects the industry, watch the news, read the wall street journal, but do not buy into any imbecilic theory of sole and direct responsibility. The airline industry is an ever changing and evolving sector that is closely dependent on economic prosperity. Keep watching to see what comes next, most of which should not be a surprise.
Logged
NAplaya16-ATC
Full Member
***
Offline Offline

Posts: 151


« Reply #4 on: April 06, 2008, 01:26:37 AM »

aevins,

is there seriously people out there who think this situation is a gov't conspiracy?   are they retarded?  or just dont have a clue?      

i agree with you 100%!!!   i know that it is a huge combination of things that have allowed this to happen, and i am not putting a blame directly on people or anything specific!   what i was askin was what do yall think could be the leading factor in 4 airlines closing in one week?

personally, i really dont think passenger turnout is the big problem, because if people have to go somewhere or want to go somewhere, they will pay the extra few dollars!  in fact, with the way gas prices are at the pumps right now, buying an airplane ticket is possibly the cheaper way to go!   

-NAplaya
« Last Edit: April 06, 2008, 01:36:44 AM by NAplaya16-ATC » Logged
PHL Approach
Hero Member
*****
Offline Offline

Posts: 743



« Reply #5 on: April 06, 2008, 02:20:07 AM »

Now combine decreased passenger turnout with rising fuel costs and increased contracting costs (food, cleaning, etc.). The revenue generated from one passenger flight is substantially less than most people think and when flights are not filling up, especially for smaller carries, it is financially unfeasible to stay afloat. Don't forget taxes, operating costs, landing fee's, etc.

Your only scratching the surface. Let me break down some of my companies operating costs for FY 2007 - Which was a gain - the numbers posted are in millions - i.e. Passenger Revenue was 8.1 Billion/ Cargo Revenue was 138 Million.

1. Since we’re in the business of carrying passengers, it’s no big surprise that our
largest revenue source is our customers. Mainline revenue includes passenger
revenue collected from all US Airways mainline flights...................$8,135

2. Our Express passengers – both from wholly owned and contract Express
carriers – are also an important source of revenue..................................... +$2,698

3. Cargo revenues are money from transporting mail and freight........+$138

4. Operating revenue also comes from other sources like ground handling for
other airlines, interline handling fees, selling frequent flyer miles, liquor sales
and excess baggage fees.................. +$729

A. The sum of items 1-4 are our total operating revenues
= $11,700

5. In 2007, fuel and related taxes made up our largest single mainline expense..-$2,630

6. US Airways hedges fuel 12 to 14 months into the future. Fuel prices fluctuate daily, so the
value of future hedges can go up and down. In 2007, we recognized a realized hedging
gain, which means the actual price of fuel purchased in the quarter was higher than our
hedged price...+$58

7. We also booked what's called an Unrealized hedging GAIN, which accounts for potential
future gains as the current market price of fuel was higher than our hedged position. If market prices were to fall below
the hedged price, we would have had a loss instead of a gain ..........................................................................................+$187

8. Salaries and related costs include salaries and benefits for all employees. This line also includes Profit Sharing
(see 8a) ... -$2,302

8a. Employee Profit Sharing is included in "salaries and related
costs." Because we were not profitable in Q4, our profit sharing pool was
reduced to $49 million.

9. Next come Express expenses, which include the costs of the wholly
owned subsidiaries, and what we pay to purchase capacity from contract
carriers.................................................................................................. -$2,594

10. We have to have airplanes to fly, and we rent the majority of our fleet.
These charges are simply called aircraft rent...................................... -$727

11. The cost to maintain and repair our beautiful birds rolls up into
aircraft maintenance expenses.................................................... -$635

12. Other rent and landing fees includes rent for facilities at airports,
airports' landing fees, etc..................................................................... -$536

13. Selling expenses include the distribution costs such as credit card fees
and fees we pay to the global distribution systems (Sabre, Apollo, etc.), as well as
advertising expenses ...................................................................................... -$453

14. Special Items, net includes merger-related transition expenses.................................................................................... -$99

15. Depreciation and amortization is the cost for the usage of aircraft parts, office equipment, ground equipment,
and any other assets that the company owns and that we expense over the lifetime of the asset.......................................... -$189

16. Finally, other expenses include things like hotels, per diem, telephone and utility costs, etc. ............................. -$1,247

B. The sum of items 5-16 is our total operating Expenses
= -$11,167

C. Total Operating Revenues (A) less Total Operating Expenses
(B) equals our Total Operating Income = $533

17. Interest earned from money we have in the bank is interest income..............+$172

18. We incur expenses for borrowed money (debt), called Interest expense........ -$273

19. Finally, we incur Other non-operating expenses or gains........................................ +$2

D. Combine items 17-19 for Total Non-Operating
Expenses, Net = -$99

E. Combine the Operating Income (C) and Non-Operating
Expenses (D) for Income Before Taxes = $434

20. Next up, Uncle Sam. Without getting too technical, we were able to
use $7 million of accumulated losses from the "old" US Airways to reduce the
amount currently owed to Uncle Sam. Under the accounting rules, we are taking a non-cash charge of $7 million for using these old losses. This does not affect profit sharing ...-$7

F. That brings us to our Net Income
(including special items) = $427 or $4.52 per diluted share

-------------------------------

Clear as mud on some of the hard operating costs airlines are incurring? I'm actually looking for a new job. I knew it was down hill around last November.
Logged
NAplaya16-ATC
Full Member
***
Offline Offline

Posts: 151


« Reply #6 on: April 06, 2008, 07:30:39 PM »

PHL,

damn!!   nice work!  lol
Logged
Gecko1
Guest
« Reply #7 on: April 06, 2008, 08:10:33 PM »

Only 427 million per year? And you didn't even add the costs of buying new planes. (Or the costs of mass inspections demanded by uncle sam.) (Forgive me if you did.)

You certainly can juggle those numbers. You could be an accountant. Wink
Logged
Gecko1
Guest
« Reply #8 on: April 06, 2008, 08:14:18 PM »

(Addition to previous post.)

Oops... you did. Excuse my short attention span. Tongue
Logged
Lezam
Sr. Member
****
Offline Offline

Posts: 392


KJFK Stream Feeder


« Reply #9 on: April 06, 2008, 10:46:01 PM »

PHL,

Are you working in aviation management?
Logged

PHL Approach
Hero Member
*****
Offline Offline

Posts: 743



« Reply #10 on: April 08, 2008, 02:05:47 AM »

PHL,

Are you working in aviation management?

No, I don't make the big bucks. I only get paid enough to get by.
Logged
laylow
Full Member
***
Offline Offline

Posts: 124


« Reply #11 on: April 11, 2008, 10:30:39 AM »

Anyone else think the government will try to nationalize the airlines?
Logged
aevins
Sr. Member
****
Offline Offline

Posts: 253



« Reply #12 on: April 11, 2008, 11:28:13 AM »

No.
Logged
NAplaya16-ATC
Full Member
***
Offline Offline

Posts: 151


« Reply #13 on: April 11, 2008, 05:51:47 PM »

Why would the govt nationalize the airlines??   thatd just be retarded!!
Logged
laylow
Full Member
***
Offline Offline

Posts: 124


« Reply #14 on: April 11, 2008, 05:54:01 PM »

Riiiight.  And our government never does anything retarded.   Like creating the TSA...
Logged
Pages: [1] 2 Go Up Print 
« previous next »
Jump to:  


Login with username, password and session length

Powered by MySQL Powered by PHP Powered by SMF 1.1.20 | SMF © 2011, Simple Machines Valid XHTML 1.0! Valid CSS!