Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Airline industry trends US
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Airline industry trends US
On November 29, 2011, American Airlines became the last of the legacy airlines to go bankrupt when its parent company, AMR Corporation, filed for Chapter 11 reorganization. Sought almost exclusively by large corporations, a Chapter 11 bankruptcy allows a firm to continue operating while reorganizing itself to create a more profitable financial framework (“Chapter 11 Definition”). Essentially, this provides a last resort business strategy: if the firm successfully reorganizes, its new financial structure begins cutting its debt. If the reorganization fails, the company begins liquidating its assets to repay the stakeholders to whom it owes money (“An Overview of Corporate”). An evaluation of the AMR bankruptcy along with the bankruptcies of its competitors provides insight to its potential impact on airline passengers, airline employees, and the economy as a whole.
To put the AMR bankruptcy into perspective, it is necessary to examine market conditions for airline companies since 2000. Every major American airline with the exception of American Airlines filed for Chapter 11 bankruptcy between 2002 and 2005 as a result of labor costs increasing while demand decreased following the recession and the September 11 terrorist attacks (Rushe). Between an already struggling economy, heightened airport security, and the reluctance of many passengers to continue air travel, these airlines filed for bankruptcy to escape debt and return to annual profitability. As of 2011, every major airline had achieved this goal with the exception of American Airlines, the only of these companies to forgo bankruptcy and, consequently, the only to remain in debt. As American Airlines’ financial issues became exacerbated by high oil prices, AMR finally f...
... middle of paper ...
...clopedia of Economics. Ed. David R. Henderson. 2nd ed. Library of Economics and Liberty, n.d. Web. 29 May 2012.
Stancavage, John. “Analysts See US Airways Merger as American’s Next Step.” Aviation Pros. Ed. Ronald Donner. Cygnus Business Media, 21 May 2012. Web. 21 May 2012. .
Trejos, Nancy. “Union Groups Accept American Airlines’ Final Contract Offer.” USA Today. Ed. John Hillkirk. N.p., 15 May 2012. Web. 17 May 2012. .
Whitely, Jason. “Unions Have Their Say on American Airlines Bankruptcy.” WFAA.com. WFAA-TV Inc., 13 May 2012. Web. 21 May 2012. .
For starters a few days before the attack on 9/11, the airlines stocks did go up. Which means the supply and demand was greater. America was making more money, which is good. The airlines that stocks markets went up, were the airlines that were hijacked which than lead to them going bankrupt. Gabi Logan was saying on USA today “ Despite this government-funded measure, several prominent American airlines declared bankruptcy not long after the 9/11 attacks.” Due to bankruptcy more than just money was
In early August of 1997 the United Parcel Service (UPS) had a predicament on its hands, a teamsters strike. UPS, the world’s largest package distribution company was coming off a year [1996] in which they reported sales of $22.4 billion. UPS Employed 75,000 management and non-union employees compared with 185,000 teamsters who are part of the AFL-CIO that were going on strike. The teamsters rejected a contract extension offer from the company leaving the fate of millions of packages carrying everything from lobsters to laser printers up in the air (Johnson).
The objective of this research report is to provide a thorough analysis of Alaska Airlines. In order to do this we chose to compare a similar company against them. The company in comparison is Spirit Airlines. Both companies compete in the same type of business through airline transportation. Many of their services include; security, safety, transportation of passengers as well as luggage, ensuring vehicle safety while in transit, concierge services, providing entertainment aboard plane, checking weather conditions prior to flight, and much more. All of the data gathered for this report was obtained from the company’s 10-k filings with the SEC.
Brue, S. L., Flynn, S. M., & McConnell, C. R. (2011).Economics principles, problems and policies. (19 ed.). New
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
In the Travel Pulse article "Airlines Leaving Us Little Choice – Like A Monopoly," posted by Rich Thomaselli, the practice of monopolization is observed in the airline industry. The author criticizes large airlines on their growth that has led to at “93 of the top 100 [airports], one or two airlines controlling a majority of the seats” (Thomaselli). The scornful article was written after recent events that have caused the Department of Justice and five States to sue two of the biggest U.S.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
Tom, Y. (2009). The perennial crisis of the airline industry: Deregulation and innovation. (Order No. 3351230, The Claremont Graduate University). ProQuest Dissertations and Theses, , 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364. (304861508).
Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.
Several large scale, interrelated conditions have affected the airline industry over the past several years in such a manner that every carrier has had to respond in order to remain viable and competitive.
1- Issues The main issue of this case is the lack of profits of the airline industry, an industry that should be more than profitable due to the large amount of customers, the necessity of using airlines’ services and the high prices charged by most of these airlines. What we are going to deal with is, why is this happening? And how is American airlines dealing with this problem?. To be able to discuss how American airlines wants to regain profitability, we must identify and analyse different issues such as, the company’s background, the airline industry as a whole, the demand for air travel, the marketing strategies, the distribution systems, pricing policies etc.
Airline industry is affected by no. of factors such as fuel price fluctuations, high fixed costs, strong influence of external environment and excessive use of marginal costing by carriers. Recessions in the industry tend to last longer, while recovery periods are generally shorter. Over the past nine years, it is observed that industry has made losses for five years and during the profitable years margins were on a lower end. The airlines industry is acutely sensitive to external events such as wars, economic instability, government policies and environmental regulations.
O'Sullivan, A., & Sheffrin, S. (2005). Economics. Upper Saddle River, New Jersey: Pearson Prentice Hall.