Shortsighted…and United Delays Emerging from Bankruptcy
Mar 18th, 2004 | By Jared BlankInteresting report out of CSFB yesterday revising profit estimates on American Airlines, now suggesting that they will not be in the black for 2004. This is interesting because the report blames this turnaround on 2 factors: higher fuel prices and excess capacity. Excess capacity, you may be asking yourself? Yes—it seems like just yesterday that airlines were sticking their planes in the desert, reducing frequencies and shrinking aircraft. Well, about 45 seconds after they stuck their jets in the desert, they started pulling them back out again, dumping capacity on competitive routes (screw you, JetBlue!) and diluting profitability. How quickly we forget.
In other news, United Airlines will push back their emergence from bankruptcy from June 30 to some point later in the summer. They must reduce their $1.6 billion government loan request before this can happen. As previously discussed here, United will use your tax dollars to lower their fares to drive Frontier out of business so they can once again raise fares to untenable levels.
And finally, the NY Times has an article looking at the now-getting-interesting Australian airline market, where Virgin Blue has turned the industry in that country upside down with its low fares.