Aviation Outlook - 2005

[FDJ2]

Fourth, their industrial prowess IS better than that of the US.

I'm not sure where you get that, but according to http://www.eurunion.org/profile/EUUSStats.htm

the EU-15: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom, have a combined GDP=$10,522 B

Whereas U.S. GDP=$11,000B

If you add in the 10 newest countries to join the EU, the compbined GDP of these 25 countries, with over 100,000,000 more citizens then the US, skyrockets to paritity with the U.S. Given that the US GDP is growing at roughly twice the rate of the EU, it would be difficult to support the claim that the European industrial prowess is better then that of the United States.

 

[Dinger]

Out of curiosity, does anyone have a rough estimate of the number of airports that can actually accomodate the A380? It will be interesting to see how many in the future will be willing to spend the money to strengthen their airport surfaces for that aircraft. I can see it as a good opportunity for cargo airlines to increase their lift capacity to Asia and Europe, but I don't know if the pax side of things can justify such a large aircraft (considering flight frequencies, gates etc.)

 

[ProLine4]

Out of curiosity, does anyone have a rough estimate of the number of airports that can actually accomodate the A380? It will be interesting to see how many in the future will be willing to spend the money to strengthen their airport surfaces for that aircraft. I can see it as a good opportunity for cargo airlines to increase their lift capacity to Asia and Europe, but I don't know if the pax side of things can justify such a large aircraft (considering flight frequencies, gates etc.)

Here's a short list of airports that can already accomodate the 380, OR will have to accomodate it within the next 5-7 years because their resident airlines will be flying the aircraft. The main problem with the ground ops is that the airplane requires an 80x80m gatebox that some airports just don't have at their terminals.

In the US:
JFK (reenforcements to taxiway bridges over Van Wyck needed first)
ORD (1 gate in T5 ready in 2006)
SFO (Intl Terminal already has 3-4 gates A380 capable)
LAX (contingent upon shifting 25L 50+ feet, enlarging shoulders, and reenforcing the bridge over Sepulveda Blvd)
ANC
MEM
SDF

Europe/Africa/Mideast:
LHR (4-5 gates currently being retrofitted)
CDG
FRA
JNB/CPT (for South African)
DXB (already A380 capable)

Asia/Australia:
NRT
KIX
ICN
PEK
HKG
SIN
etc....

 

[TonyC]

Don't confuse prowess with big numbers.







.

 

[FDJ2]

Don't confuse prowess with big numbers.






.

Or size

 

[spinproof]

Don't confuse prowess with big numbers.







.

Don't confuse Government subsidy with either.

 

[FlyBoeingJets]

Thanks for the info, FDJ2. By the way, Boyd's 2004 pop quiz is pretty interesting. The question about labor cost as a percentage of total cost is very interesting - I guessed Southwest on a lark and was surprised that it was the correct answer.

Southwest's Slow Slide
Friday January 21, 2:34 pm ET
By Bill Mann


One of the investing habits I have is tracking the financial performance for companies over long periods of time. It's relatively easy to see how companies have done over the last two or three years -- you need only to pull the most recent 10-K. Some companies, such as Coca-Cola (NYSE: KO - News), put in financial information that goes back a decade -- which can be tremendously helpful in determining how well the company has deployed its capital for long periods of time. I wish more companies did this.

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[url="http://us.a1.yimg.com/us.yimg.com/a/mo/motleyfool/hg_tmf300x250_noecap_3_yahoo.gif"]http://us.a1.yimg.com/us.yimg.com/a/mo/motleyfool/hg_tmf300x250_noecap_3_yahoo.gif[/url] I've updated my numbers on Southwest Airlines (NYSE: LUV - News) -- which, to its credit, gives financial information for the last five years in its 10-K -- following its earnings report earlier in the week. For some unknown reason (let's go out on a limb and call it laziness), I hadn't updated its financial information for two years prior. I have to say that I'm somewhat shocked at how some of the financial statistics at Southwest have declined over the longer term.

I'd say that this is a function of oil prices, but this isn't entirely it. Southwest, which has prided itself (rightfully) on its frugal nature, has seen a steady rise in the amount of total revenues that are consumed paying salaries, wages, and benefits. In 1998, salaries accounted for 30.8% of revenues; in 2004, that number was 37.4%, with the amount consumed gradually increasing during that span. If you count on just the most recent 10-K, you might not see the longer-term degradation here, since you get only 2004, 2003, and 2002, when salaries consumed 33.4%.

You can see the impact of this directly on the operating income line. For 2004, operating revenues for Southwest were $554 million, or 8.5% of total sales. In 1998, the company generated operating revenues of $683 million for an operating margin of more than 16%. So while Southwest has generated substantially more revenue in 2004 than in 1998, it generated less operating profit.

The degradation gets even more extreme when you work from the high point of Southwest's operating profitability: 2000. In that year, the company's operating profit was $1.02 billion on revenues of $5.64 billion, a margin of 18%. Yes, 2001 was a dislocative event for the entire airline industry, but Southwest's 2003 and 2004 results were worse than those in 2001.

We could point to salary creep (or head-count creep) as a direct factor, but really all of Southwest has become less efficient from an operating perspective. In 2001, the company's operating expenses consumed 88.6% of revenue, while in 2005 they consume 91.4%. And again, it's not like 2001 was a bellwether year: In 1998, operations consumed only 83.6%. For shareholders, this trend is worrying. Southwest, along with its discount brethren JetBlue (Nasdaq: JBLU - News) and AirTran (NYSE: AAI - News), have absolutely tortured the legacy airlines with their low-cost structures. But those costs, at Southwest, at least, seem to be creeping higher. Perhaps this is a sign that the best low-hanging-fruit routes have been plucked; perhaps it's a natural outcropping of an aging employee base that demands more money (again, rightfully so). But the long-term trend for Southwest is pretty ominous.


This statistic is worrisome. The aging of Southwest's workforce.

FBJ

 

[superrav]

I like this one...

[font=Tahoma, Verdana, Lucida]And From The Homeland Security Front...[/font]



[font=Tahoma, Verdana, Lucida]An audit of the use of $600 million in federal homeland security funds awarded to the State of Texas has found the following:[/font]

• [font=Tahoma, Verdana, Lucida]Some of the funds were used to buy a lawn mower trailer to be used at lawn mower races, calling the trailer "security equipment."[/font]
  
• [font=Tahoma, Verdana, Lucida]Some of the funds were used to buy communications equipment from a company owned by a county commissioner.[/font]
  
• [font=Tahoma, Verdana, Lucida]In some cases, the funds were used to fund county festivals.[/font]
  

[font=Tahoma, Verdana, Lucida]Again, not to worry. The state is considering requiring some grant recipients to report how they spend the money. [/font]

[font=Tahoma, Verdana, Lucida]But just some recipients, don't ya' know.[/font]

[font=Tahoma, Verdana, Lucida](c) 2005, The Boyd Group/ASRC, Inc. All Rights Reserved[/font]
[font=Tahoma, Verdana, Lucida][/font]
[font=Tahoma, Verdana, Lucida]freaking texas...gotta love it.[/font]

 

[Guitar Guy]

This statistic is worrisome. The aging of Southwest's workforce.

FBJ

Thanks for the articles. It will be interesting to see what the future brings for all of us in aviation.