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Forecasted First Quarter Results

Old School

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Schwanker

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Dow Jones

EARNINGS PREVIEW: US Airlines Seen Posting Losses Again
10:55 AM EDT April 8, 2009


By Kerry E. Grace
Of DOW JONES NEWSWIRES

TAKING THE PULSE: U.S. airlines are again seen posting losses as demand continues to slump even as fuel prices have dropped. When oil prices began falling sharply from their record peak last summer, carriers were convinced that savings in jet fuel - their biggest expense - would more than make up for any drop in travel brought on by the recession. But demand is sliding much more quickly and significantly than airlines expected, prompting projections that the industry will be forced to cut more capacity.
And now, as fuel prices edge higher, U.S. airlines are facing a difficult choice over how to manage their fuel costs without repeating last year's costly mistakes. Airlines had been hedging fuel prices far in advance, but after oil maxed out in July, they suffered huge write-downs because they were forced to continue to pay peak prices even after the recession cut back the number of passengers they served.

COMPANIES TO WATCH:

AMR Corp. (AMR) - reports April 15

Wall Street Expectations: Analysts surveyed by Thomson Reuters anticipate a loss of $1.52 a share on revenue of $4.72 billion. The American Airlines parent had a year-earlier net loss of $1.32 on revenue of $5.7 billion.
Key Facts: AMR said in March it expects American's first-quarter revenue per available seat mile, a key performance measurement, to fall up to 11% on falling demand. In response, the number of available seats is anticipated to fall further later this year. Fitch lowered its credit ratings on AMR and American to highly speculative last month, citing the "collapse" in industrywide demand as the carrier continues to burn through cash.

Southwest Airlines Co. (LUV) - reports April 16

Wall Street Expectations: The discount carrier is seen posting earnings of 3 cents a share and revenue of $2.44 billion, down from 5 cents and $2.53 billion, respectively.
Key Facts: The expected profit, excluding fuel-hedging impacts, comes after two straight quarters of net losses, the first since 1991. They were caused by the plunge in fuel costs overwhelming Southwest's vaunted hedging program. Chief Executive Gary Kelly is navigating the tough economy by expanding into new markets and tinkering with the carrier's low-cost service, adding flights to heavily trafficked U.S. airports.

Delta Air Lines Inc. (DAL) - reports April 21

Wall Street Expectations: Analysts forecast a loss of $1.01 on revenue of $6.79 billion, compared with a prior-year loss of $16.15 a share on revenue of $4.77 billion. Last year's results included a $6.1 billion fuel-hedging write-down.
Key Facts: Delta CEO Ed Bastian said last month the carrier would pull an additional 10% from its international capacity this year on top of previously announced systemwide cuts of 6% to 8%. The company has also said it expects to report a "solid" full-year profit despite forecasting a 14% drop in operating revenue for the first quarter. It said last month it expected to break even before taxes in the first quarter and post a profit in the second quarter.

Continental Airlines Inc. (CAL) - reports April 22

Wall Street Expectations: Analysts project a loss of $1.13 a share and revenue of $3 billion. A year ago, the company posted a loss of 81 cents on revenue of $3.57 billion.
Key Facts: The company aims to switch to the Star Alliance of global carriers from the rival SkyTeam grouping by late October, saying a move would provide a better defense against the industry downturn and cement ties with new partner United Airlines. The company said last month that declining business travel was cutting into its bottom line, and key measures of profitability were deteriorating faster.

UAL Corp. (UAUA) - report date to be announced

Wall Street Expectations: The United Airlines parent is slated to post a loss of $4.27 a share on revenue of $3.8 billion, compared with a year-earlier loss of $4.45 a share on revenue of $4.71 billion.
Key Facts: UAL said in March it expected first-quarter passenger revenue per available seat mile to fall 12% to 13%. Avondale Partners analyst Bob McAdoo called that worse than other legacy carriers' predictions despite United undertaking the industry's deepest capacity cuts. Looming is labor negotiations with six U.S. unions in April. Employees are working under a pact negotiated in bankruptcy court, when the airline significantly cut costs to reorganize.

(The Thomson Reuters estimates and year-ago net may not be comparable because of one-time items and other adjustments.)

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/nae/al?rnd=nTu4LxwcXyZ5kQj31xplfg==. You can use this link on the day this article is published and the following day.


(END) Dow Jones Newswires
04-08-09 1055ET
Copyright (c) 2009 Dow Jones & Company, Inc.
 

crxpilot

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crj567

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Allegiant $1.18

-Gotta be encouraging for DAL and all their "inspired" moey-making INTL routes.....

-More importantly-look who DID make money. Either of those two could be knocking on DAL's door in ATL before long....

-Hmmm..... "inspired" indeed-Steenland and Andersen rock!

-Got that fry hat ready, Gen? I'll show you how to get them nice and golden-brown!
 

PeanuckleCRJ

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Sucks that you didn't get hired at DL, crj567. Do you have to whine in every thread about it?

If you didn't notice, we're projected to have performed better than all the other legacies....with an economy in the crapper.
 

maxblast72

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-More importantly-look who DID make money. Either of those two could be knocking on DAL's door in ATL before long....
Analyst estimate for Airtran 1st quarter = Breakeven

10 analysts predicting Airtran's 2nd quarter to be the best ever with a net profit over $50 mil. Full year 2009 estimate average for the 10 analysts is for Airtran's best net profit ever of $120 mil.

Airtran's 2008 total fuel bill was $1.35 billion (including $150 million one time loss to unwind future hedges). Airtran's 2009 fuel bill (including the 4% ASM reduction) and the $1.80 predicted Jet A price would come in around $650 million. That is a $700 million dollar drop from the 2008 fuel bill. Even if our total revenue drops 10% (or about $250 million), we are still in much better shape this year.

Didn't know that Allegiant's business model included coming into the largest legacy hub (Delta just under 1,000 departures a day counting regionals) and largest LCC hub (240 departures a day) in the world.

If Southwest was going to make their move, they would have had alot easier time in 2008 when Airtran and Delta were paying $2/gallon more for Jet A than Southwest. If Southwest wants to move into ATL now, I am sure they would receive a pretty good competitive response from both Airtran and Delta.
 
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crj567

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Analyst estimate for Airtran 1st quarter = Breakeven

10 analysts predicting Airtran's 2nd quarter to be the best ever with a net profit over $50 mil. Full year 2009 estimate average for the 10 analysts is for Airtran's best net profit ever of $120 mil.

Airtran's 2008 total fuel bill was $1.35 billion (including $150 million one time loss to unwind future hedges). Airtran's 2009 fuel bill (including the 4% ASM reduction) and the $1.80 predicted Jet A price would come in around $650 million. That is a $700 million dollar drop from the 2008 fuel bill. Even if our total revenue drops 10% (or about $250 million), we are still in much better shape this year.

Didn't know that Allegiant's business model included coming into the largest legacy hub (Delta just under 1,000 departures a day counting regionals) and largest LCC hub (240 departures a day) in the world.

If Southwest was going to make their move, they would have had alot easier time in 2008 when Airtran and Delta were paying $2/gallon more for Jet A than Southwest. If Southwest wants to move into ATL now, I am sure they would receive a pretty good competitive response from both Airtran and Delta.


That is not exactly what I had in mind...

The NWA guys who hijacked DAL and are now running the show have stated that they plan to "compete" AirTran out of business -essentially. I hope that does not happen.... For both companies' sakes.

My point is that these morons would be much better to just leave the status quo alone. AirTran is good in ATL-they keep a lot of gates busy, and they make it unlikely that SWA or ALGT would make a move on ATL-in force.

If Steenland and his boys were to run the "tranny" out of business, or make them shrink significantly,SWA and ALGT would be all over DAL's butt in a hurry.

-Who would you rather compete against-if you were running DAL? AirTran-which has practically new planes and pays pretty well, or ALGT which flies 40+yr old burners and pays less than some RJ jobs?
 

crj567

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Sucks that you didn't get hired at DL, crj567. Do you have to whine in every thread about it?

If you didn't notice, we're projected to have performed better than all the other legacies....with an economy in the crapper.

So pea-tard....

How ARE those INTL routes doing?

-Smart, really smart.....

P.S.-I love how you DAL guys assume everyone- everywhere wants to work at your company... I have never applied, been interviewed, or been shown the door as many of you seem so keen to claim...

-Your dump ain't on my list-especially after the merger...
 
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PeanuckleCRJ

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INTL routes seem to be doing fine.

I wouldnt be so quick to assume Allegiant would jump into ATL... they are a non-competing airline (much like DL was many years ago when they were printing their own money pretty much....before they got forced into the competition). I wouldn't doubt it if WN jumped into ATL soon anyways.


That's good you aren't applying here... sounds like you would blow to fly with on a 4-day...even worse on a 10-day!
 

contrail67

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Will see how the Wall Street "expectations" hold out.....not always how it ends up.
 

crj567

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INTL routes seem to be doing fine.

I wouldnt be so quick to assume Allegiant would jump into ATL... they are a non-competing airline (much like DL was many years ago when they were printing their own money pretty much....before they got forced into the competition). I wouldn't doubt it if WN jumped into ATL soon anyways.


That's good you aren't applying here... sounds like you would blow to fly with on a 4-day...even worse on a 10-day!

Are you really dumb enough to think those INTL routes are doing well? Check back after a couple of quarters and a few hundred furloughs and let me know what you think of INTL routes at that point.
 

Cobraair75drvr

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It is very telling who IS making money. It is the airlines that are not throwing money supporting money losing RJ operations. It is what we have been trying to explain to our enlightened mgmt for years. RJs are money burners period. If the mainline has to buy the a/c, guarantee fuel price and guarntee a return of 10%, do all the advertising, etc. There is absolutly no reason some cities can support 10 50 seat flights per day to competing hubs. These cities should have 4-5 flights per day, with at least 3 in the 100-125 seat range and MAYBE and rj or 2 to fill in the off peak times. There seems to be a trend of getting out of contracts, and upgauging a/c, so hopefully in a few years you won't see any, or very few 50 seat money pits. The key will be not to allow too many 70 seaters outside of mainline.




-Gotta be encouraging for DAL and all their "inspired" moey-making INTL routes.....

-More importantly-look who DID make money. Either of those two could be knocking on DAL's door in ATL before long....

-Hmmm..... "inspired" indeed-Steenland and Andersen rock!

-Got that fry hat ready, Gen? I'll show you how to get them nice and golden-brown!
 

crj567

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It is very telling who IS making money. It is the airlines that are not throwing money supporting money losing RJ operations. It is what we have been trying to explain to our enlightened mgmt for years. RJs are money burners period. If the mainline has to buy the a/c, guarantee fuel price and guarntee a return of 10%, do all the advertising, etc. There is absolutly no reason some cities can support 10 50 seat flights per day to competing hubs. These cities should have 4-5 flights per day, with at least 3 in the 100-125 seat range and MAYBE and rj or 2 to fill in the off peak times. There seems to be a trend of getting out of contracts, and upgauging a/c, so hopefully in a few years you won't see any, or very few 50 seat money pits. The key will be not to allow too many 70 seaters outside of mainline.


One quarter of losses related to failing INTL routes would account for all the money you claim rjs burn up over a decade.....

-Which do you really think loses more money? An rj to DHN with 23 people, or a 767 tooling across the planet with 70 people?

-It is truly amazing how many of you can't see the obvious truth-maybe I wouldn't want to see it either.
 

Max Powers

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One quarter of losses related to failing INTL routes would account for all the money you claim rjs burn up over a decade.....

-Which do you really think loses more money? An rj to DHN with 23 people, or a 767 tooling across the planet with 70 people?

-It is truly amazing how many of you can't see the obvious truth-maybe I wouldn't want to see it either.

A wise man once said you can never convince a man of the truth if his job depends on a lie.

You both are losing money! RJs and Wide bodies and pretty soon Narrow bodies. Delta and the legacies alike can not fight market realities. These market realities will slowly kill and shrink these companies over the next two decades.
 

bizicmo

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I know these are forecasted numbers, but how can United more then double the loss of the next closest airline. That seems a little outrageous to me?
 

contrail67

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A wise man once said you can never convince a man of the truth if his job depends on a lie.

You both are losing money! RJs and Wide bodies and pretty soon Narrow bodies. Delta and the legacies alike can not fight market realities. These market realities will slowly kill and shrink these companies over the next two decades.

So you know what is going to happen the next 20 years?
 
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