Delta Airlines is a tricky one. The airline lost more money than Northwest last year and has a higher debt load, yet some how they seem to be in better shape. The airline has slashed their smaller hubs, cut flights, and has said that Song, their low cost shuttle carrier, will cease operations and will be absorbed back into the airline. A couple of rounds of battles between their employees' labor groups recently has put the airline back in jeopardy. Delta has reduced domestic capacity while increasing international destinations, similar to most other legacy carriers in the last few years.
Delta will survive. They will probably exit bankruptcy protection in mid to late 2006. The number 3 airline in the US will emerge even stronger. Their iron rule over the southeast puts the airline in a great situation. The only thing that could prevent Delta from emerging stronger from bankruptcy protection could be the bad news that came from Wall Street today regarding oil prices, which rose to nearly US$70 a barrel again.
United Airlines will finally step out of court and finally play on the field with the big boys after spending a record 37 months in bankruptcy protection. The airline has managed to cut billions from their bottom line, but at the cost of pension plans and 25,000+ jobs. The sleeker airline will probably not turn a profit this year but is expected to become more competitive on routes in which they battle it out with LCCs. The number 2 airline in the US has been able to reduce the age of their fleet, sign deals with regionals to modify their aircraft to accommidate United's new ExPlus Service, and pump their frequent flier programs. Rumors have it that United is talking to XM Satelite Radio to put radio on all their planes. But those are just rumors. United has also applied with the FCC and FAA to put wireless internet on their aircraft. No decision has been made but look for wireless internet services to start sometime late 2006 or early 2007. As for Southwest Airlines, the company just reported another stellar quarter. The airline just recently expanded service back into Denver, and just after a few days said that it would be expanding service to multiple destinations. The board over at SWA has got their business plan down pat. If you want to check out something funny, watch the series Airline over at A&E TV. Southwest created a hit when they agreed to let cameras follow around employees and passengers. This is has been great for the airline showing that they know how to handle customers both nasty ones and polite ones. All the free press can't hurt either.
JetBlue and Air Tran. Watch out for these two. They are set to have stellar years again. Air Tran is expanding like crazy and who wouldn't want to fly on the airline. Brand new planes and an environment that makes flying fun again. JetBlue, you rock my world. A guy with some start up capital managed to create an airline that has boomed! Please both of you, start flying to the Midwest more often, especially JetBlue, maybe a nice couple of flights to St. Louis or Kansas City would be nice.
Overall, dont look for the huge losses of last year. However, do expect that Delta and Northwest to loss mounds of cash and quick, especially if they can not get costs under control and quick. If either airline has a strike by pilots or flight attendants, watch out, those airlines may have to liquidate some of their company.
To sum it up:
Profit Makers in 2006: American, JetBlue, Air Tran, Southwest.
Possible Profit Makers in 2006: Continental, US Air, United
Profit Losers in 2006: Delta, Northwest.
Part Three: Airline Outlook in 2011; What Just 5 Short Years Will Do To The Industry
Delta
United
Southwest
JetBlue
Air Tran
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