Recently United Airlines announced they made an operation profit for 2006, but investors were skeptical of the airline as oil prices jumped and reports that passenger revenue likely will rise at a slower pace in 2007 than in the previous year.
For the 4th quarter United loss $61 million dollars but for the entire year managed to post a $447 million dollar 2006 full year profit, a reversal of the loss that they suffered in the five previous years.
Analysts predict that United and other U.S. airlines will enjoy a strong 2007, posting cumulative profits of nearly $6 billion. But at what cost will that come? Will it be under the umbrella of industry consolidation? UAL’s CEO still believes that consolidation is needed in the industry.
This comes as the Senate is currently holding hearings into whether or not consolidation in the industry will be good for passengers or bad.
"When I say re-regulate, the whole world goes crazy. However I am becoming increasingly convinced that some regulation may become an option to make sure small communities are not harmed by consolidation," said Sen. Jay Rockefeller, D-W. Va., who heads the Senate Commerce Committee subcommittee on aviation issues.
Missouri’s new freshman Senator, Claire McCaskill said, "I have a great deal of angst over what has happened to the former TWA employees.”
US Airway’s CEO, Parker, said there would be little in common between the Delta/US Airways merger and the TWA/American merger. The latter took place before the Sept. 11, 2001, attacks, a slowing business cycle and the rise of low-fare carriers led to 155,000 industry layoffs.
With the industry just starting to get back on its feet, the Senate looking into industry consolidation, and hostile bidders demanding stock holder lists, it could be one interesting year.
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