No matter which way you slice it, the Farnborough air show has been a marvel of activity this week with massive aircraft and engine orders from plenty of non-US airlines, a slew of cooperative agreements and MRO deals, and the launch of Bombardier’s CSeries programme (although with a letter of interest from Lufthansa, we might want to call this a soft launch for now).
But while contract signatories may be running low on blue and black pen ink at the UK show, we here on the other side of the pond are watching rather helplessly as the US air transport industry continues its rapid decline into a loss-making abyss of tremendous proportions.
Yesterday, American Airlines’ parent AMR Corp announced a second quarter net loss of $1.4 billion, while Delta Air Lines hit the negative $1 billion mark.
This morning, Continental showed that its cost control efforts are paying off by reporting just a $3 million loss (with the help of a $22 million after-tax gain). But the carrier has also put things into clear perspective, stating: “The combination of record high fuel prices, weakening economic conditions and a weak dollar has resulted in the worst financial environment for US network carriers since the 9/11 terrorist attacks.”
More bad news is no doubt on the horizon. Will this mean additional capacity cuts, fleet reductions and job losses? It probably doesn’t take a rocket scientist to answer that one.
American has already gotten the ball rolling by announcing plans to retire its entire Airbus A300 fleet, a total 34 aircraft, by the end of 2009 – three years earlier than originally scheduled. How will it replace this lift? A Boeing 787 order might not be such a bad idea, but money might be a little tight right now (as well as sensible delivery slots).
The divestiture of American’s sister American Eagle has also been put on ice. I guess not too many folks are in the market for a batch of small regional jets right now.
There is, of course, so much more to say about the current state of the US airline industry, but I think I’ll let some of Flight premium news service Air Transport Intelligence’s recent headlines do the talking.
AMR records 2Q net loss of $1.4b
American to retire A300 fleet by end of ’09
Impairment charges keep Delta in the red
Frontier to lay off 456 employees
Frontier seeks approval for aircraft deferrals
Frontier remains in red
IATA forecasts massive industry losses in 2008
Midwest to reduce 40% of workforce
AirTran plans to cut 480 jobs
Spirit plans route cuts and fleet reduction
US ATA projects fuel in $170 per barrel range
UAL details charges related to staff and fleet reductions
Embraer details forecast for 50-seat displacement in the USA
Jazz to cut flights, jobs
AMR taking up to $1.2b charge for MD-80, ERJ-135 write down
Fuel costs force AirTran to institute wage cuts
(red ink stain pic from http://www.thewritingdesk.co.uk/ink_cat/ink_cat.php?brand=all&colour=red)