Airline Industry Update June 27, 2005 Alynne Hanford American Airlines Global Sales Manager Group - PowerPoint PPT Presentation

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Airline Industry Update June 27, 2005 Alynne Hanford American Airlines Global Sales Manager Group

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Airline Industry Update. June 27, 2005. Alynne Hanford. American Airlines. Global Sales Manager ... American boarded 8.4 million passengers and American Eagle ... – PowerPoint PPT presentation

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Title: Airline Industry Update June 27, 2005 Alynne Hanford American Airlines Global Sales Manager Group


1
Airline Industry Update June 27, 2005
Alynne Hanford American Airlines Global
Sales Manager Group Meeting Travel
2
(No Transcript)
3
Airline Trends
  • What were the estimated annual losses for the
    airline industry in 2004?
  • A. 6.9B
  • B. 7.7B
  • C. 9.2B
  • D. 13.1B

4
And the answer is
  • B. 9.2 Billion

5
Challenges/Facts
  • Airline industry is governed by 1890 Railroad Act
  • Most heavily taxed industry
  • File over 100,000 fares every day
  • 2004 costs for 12 largest US carriers was 96.8B,
    up 5 billion from 2003
  • Airline industry lost 9.2B in 2004
  • Oil is up 55 - 60 since 2003 or 80 since 2001-
    hit milestone of 60 per barrel in June 2005
  • In May American boarded 8.4 million passengers
    and American Eagle 1.8 million passengers

6
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7
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9
Fuel
  • Industry consumes 18B gallons of fuel annually
  • 17.2B spent on fuel in 2004, up 5B from 2003
  • The average 2 hour MD80 flight consumes more than
    2,100 gallons of fuel. A 5 hour 767 flight burns
    7,500 gallons.
  • A 1 cent increase in the price of a gallon of jet
    fuel equals an additional 29M in annual cost to
    AA
  • AA has spent 1B more on fuel in 2004 than in
    2003
  • AA would have earned 100M in 1Q05 at fuel cost
    of one year ago instead of 162M loss

10
Current Situation
  • Since 9/11, all CEOs from all major carriers have
    stepped down
  • DL lost 5B in 2004
  • NW losses at 3.1B since 2001- hoping to stave
    off bankruptcy- NW CEO sells 59 of his shares
  • NW to cut 2,000 aircraft maintenance jobs (50)
  • UA, US and ATA are in bankruptcy
  • UA has lost 11B since 2001, 1.3B YTD 2005,
    hopes to emerge from bankruptcy in September

11
Current Situation
  • CO halts talks with flight attendants and calls
    for federal mediator
  • America West and US got okay 6/24 to merge in a
    1.5 billion deal - will become larger than
    Southwest and operate under US
  • Alaska reaches tentative agreement with pilots
  • AA growing international service significantly -
    introduces fuel initiative to save 100M/year
  • Southwest breaks tradition and code-shares with
    ATA
  • Japan and France jointly developing aircraft to
    succeed the Concorde over next 3 years

12
The dogmas of the quiet past are inadequate to
the stormy present. The occasion is piled high
with difficulty, and we must rise with the
occasion. As our case is new, we must think anew
and act anew.

Abraham Lincoln, 1862
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