How can airlines be losing money

[ISaidRightTurns]

How can the airlines be losing money? The folks up front probably only get paid 35-55k a piece. Flying the most efficient a/c in history. Passenger loads are high, and no services are provided (meals, pillows).

 

[Immelman]

Fuel.


So here is my revolutionary concept... shhh.... you'll have to scroll down.. the MBAs getting paid the big bucks will never guess...














Increase ticket prices. What a concept! Oh, what's that you say, SWA is hedged? Yes, they are. SWA doesn't fly everywhere (yet) either. They only have so much capacity.

What I don't understand at all is why on certain routes where there is no competition from hedged airlines such as SWA (say, West coast to Hawai'i), that ticket prices are still so low... the only other explanation is excess capacity... and if that is the case, it sounds to me like one or two large carriers need to bite the dust for the rest to make money.

However, you can take the contrarian view... My dad told me once that if you don't (personally) make a lot of money during bankruptcy you've done soething wrong. I think airline management has this one down pat... perhaps its their intention all along?

 

[Dangerkitty]

How can the airlines be losing money? The folks up front probably only get paid 35-55k a piece. Flying the most efficient a/c in history. Passenger loads are high, and no services are provided (meals, pillows).

Since you state that the pilots up front are making 35-55k a piece I assume that you are talking about pilots of Regional Jets.

To be quite honest the Regional Jet cannot and will not make any money. It is almost impossible to make money with an RJ. The cost per seat mile can easily be over 20 Cents per mile and many times it is higher. On the other hand most of AA's Mainline fleet hover around 8-9 cents a mile.

The AA pilot's union (APA) was given an indepth 2-3 hour lecture by Michael Boyd on why the days are numbered for the 50-70 seat RJ's. Say what you will about Mr. Boyd but he is right many more times than he is wrong. ALSO, Mr. Boyd does things that are almost foreign in this industry. He bases his arguments and opinions on factual data not what is the popular thing to state.

The coming years for the 50-70 seat RJ's are not going to be pretty. As for the 90-110 seat E-jets. Well, that is another story.

 

[Thedude]

Or you can restrucuture your debt and pay down what is due 5-10-15 years from now and call that a loss.

Or you can take what you project to make and what you actually made and call that a loss.

Remember figures don't lie but liars figure.

 

[Publishers]

The actual flying part of an airline is but one small part of a big cog. In order to operate an airline today, there is a massive infrastructure to support the passenger actually being in the seat. Reservations systems, bank card processing, opeations systems, crew scheduling. hardware and software, baggage systems, screening, etc etc etc.

Many pilots over the years have started airlines and the problem is that they usually rush to address all the things that bugged them over the years about their job. Only when they are closing the doors do they realize they had no clue about what was involved.

 

[Purpledog]

That reminds me of an old joke.

How does a pilot become a millionaire? Give him two million to invest.

 

[sky37d]

How can the airlines be losing money? The folks up front probably only get paid 35-55k a piece. Flying the most efficient a/c in history. Passenger loads are high, and no services are provided (meals, pillows).

The folks up front are a very small part of the whole equation.

Fuel is killing them. The increase in gasoline will eventually hurt the consumer, and they will not fly as much. VLJ's will hurt the airlines. There will be 1-2 mainline companies failing, and then ticket prices will increase. Then they can make money. However, who isn't making money in the airlines. Only the stock holders.