It’s no secret that the major legacy airlines have been struggling for years, but now the high cost of fuel is putting even some of the better non-legacy performers — like Southwest Airlines and some of the regional operators — closer to the edge. “It’s getting harder and harder to find any winners among the nation’s airlines,” James May, president of the Air Transport Association of America, said at an aviation forecast conference in Savannah, Ga., on Monday. “All of them are hurting.” Analysts for the Boyd Group, which organized the conference, say the operating advantage may soon revert to the legacy carriers, as they emerge from Chapter 11 with their labor costs under control and revenue streams intact. Southwest has been staying profitable because it had a supply of “hedged” fuel keeping its costs down, the analysts said. But that advantage will likely be gone by January, and without it, the airline will find it tougher to remain profitable, according to the Boyd Web site.
Analysts: Don’t Write Off Legacy Carriers
Key Takeaways:
- High fuel costs are severely impacting the entire airline industry, pushing even previously resilient non-legacy carriers like Southwest Airlines closer to financial difficulty.
- The airline industry faces widespread struggles, with analysts suggesting that legacy carriers emerging from Chapter 11 with controlled labor costs might soon regain an operating advantage.
- Southwest Airlines' key profitability factor, its fuel hedging advantage, is expected to expire soon, which will make maintaining profitability significantly more challenging.
See a mistake? Contact us.
