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StumbleCuts in Las Vegas help US Airways narrow losses
Thursday, Jan. 28, 2010 | 7:01 a.m.
US Airways Group
| 4Q 2009 | 4Q 2008 | % Change | 3Q 2009 | |
|---|---|---|---|---|
| Revenue | $2.63 billion | $2.76 billion | -4.9% | $2.719 billion |
| Net income | $79 million | $543 million | -- | $80 million |
| Net income per share | 49 cents | $4.76 | -- | 60 cents |
+ By passenger volume, US Airways is the No. 2 carrier at McCarran International Airport.
+ “The actions we have put in place to address the challenges of the past two years –
capacity cuts, a la carte revenues, cost control and a commitment to efficient operating reliability – are working.” – CEO Doug Parker
+ Jan. 27 stock price: $4.86 (52-week high: $7.75)
++++++++++
Sun Coverage
US Airways, the second-busiest air carrier at McCarran International Airport for more than a decade, narrowed losses in the fourth quarter with a strategy that includes a major cutback in Las Vegas.
The Tempe, Ariz.-based carrier, which in October unveiled and began initiating a plan that realigns operations to focus on the company’s hub airports in Phoenix, Philadelphia and Charlotte, N.C., will close crew bases in Las Vegas Monday and trim its flight schedule to 36 operations a day at McCarran by the end of February.
At one time, the airline had an average 140 daily flights here.
So far, the cuts are starting to work as US Airways reported $79 million in losses, 49 cents a share, on revenue of $2.63 billion for the quarter that ended Dec. 31. A year earlier, the airline had a loss of $543 million, $4.76 a share, on revenue of $2.76 billion.
“The actions we have put in place to address the challenges of the past two years –
capacity cuts, a la carte revenues, cost control and a commitment to efficient operating reliability – are working,” said US Airways CEO Doug Parker in a release accompanying the issuance of earnings information.
A conference call on earnings was scheduled later today.
The loss was in line with analysts’ estimates, which forecast a 50-cent loss. Analysts generally are upbeat about the airline because of its cash position and the company’s stock price has hovered on the high end of its 52-week range. As of Dec. 31, the company had about $2 billion in cash and investments, $500,000 of which was restricted.
US Airways and its predecessor, America West Airlines, once operated a night hub at McCarran that saw the bulk of its customers arrive or leave after 8 p.m. When fuel prices spiked in 2008, the airline found that it could no longer operate red-eye flights at discount prices and make a profit, noting that it would cost more to fly the planes than park them.
Since the night hub closed in 2008, the airline has been shrinking in Las Vegas. The October decision resulted in an estimated 300 of the airline’s 880 McCarran-based workers to be laid off or transferred. US Airways has not confirmed how many jobs have been cut locally.
By the end of February, US Airways will end nonstop flights to Fort Lauderdale and Orlando, Fla.; Orange County, Calif.; and Chicago’s O’Hare International Airport. It already has dropped flights between Las Vegas and Sacramento, San Diego and San Jose, Calif.; Detroit; Minneapolis; Seattle; and the Canadian cities of Edmonton, Alberta; Vancouver, British Columbia; and Toronto.
US Airways also has reduced its flight schedule on nonstops to Los Angeles International Airport, Boston and Fresno, Calif.
Competitors fly all the routes US Airways has cut.
The airline has noted that Las Vegas, primarily a leisure market, doesn’t offer the same profit margins and yields as other business travel-driven markets. The last straw was the recession that cut demand to the city in late 2008 and all of 2009.
In the earnings announcement, US Airways noted that revenue declined 4.9 percent, in part due to the 1.8 percent drop in available seat miles. But operating expenses were down 16.8 percent for the quarter due to a 14.6 percent decrease in fuel expenses.
The airline also benefited from a 9.9 percent increase in “other revenue,” which includes ancillary revenue like baggage fees and charging for meals. The company reported $286 million in other revenue for the quarter.
For 2009, US Airways had a net loss of $205 million, $1.54 a share, on revenue of $6.75 billion. That compares with 2008 totals of a $2.21 billion loss, $22.11 a share, on revenue of $8.18 billion.
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With the order from Obama not to go to Las Vegas more and more companies are finding profits will be found by cutting their ties to our city.
Such a shame for an utterance from an amateur trying to score a sound bite for the news cycle. A bigger shame he couldn't find the word to undo it as his ego wont allow him to admit an error.
I wonder what harry Reid has planned to help Nevada? He seems to have destroyed the rest of the nation.
How astute, neiman1! All of Las Vegas' shortcomings are Obama's fault!!! Isn't it amazing how one word from President Obama became law in the minds of thousands who would have otherwise spent money visiting Vegas? With that kind of power you would think that Obama would have passed Universal Health Care by now. What a president! He started the decline of Las Vegas in only one year and actually got it started more than a year before he took office! WOW!!! I'm impressed...
Right, Bajos, everything that happens in Vegas is Obama's fault. From follow-home robberies to pollution to bad weather, it's all his doing. lol
neiman1:
If you don't understand the following quotes, may I suggest you google "Obama's comments regarding Las Vegas" and read all the articles in full. If you got your head out of your A**, maybe THEN you will understand it in the way it was meant:
"Obama said during a town hall meeting this week in Indiana that companies shouldn't take trips to Las Vegas or go to the Super Bowl at taxpayers' expense."(USA Today, 2/9/09)
"Sin City's mayor wants President Obama to apologize for saying companies shouldn't visit Las Vegas on the taxpayer's dime... Obama made the remarks Monday during a town hall meeting in Elkhart, Ind., ...."You can't get corporate jets, you can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime," Obama said."...Fox News 2/9/09
"Two days after Obama slammed bailout-taking bankers for planning a get-together at a swanky Las Vegas resort, Nevada-connected boosters, politicians and businesspeople were still talking back... On Monday during a question-and-answer session in Elkhart, Ind., Obama criticized bankers from Wells Fargo, which accepted $25 billion in taxpayer money, for planning a 12-day event at Wynn Las Vegas.... "You can't take a trip to Las Vegas or down to the Super Bowl on the taxpayers' dime," Obama said. LVRJ, 2/11/09
NOW do you understand what the President was saying? He didn't want YOUR TAX MONEY PAYING FOR TRIPS TO LAS VEGAS!!!! Is this SO HARD to understand???????
You can't take a trip to Las Vegas or down to the Super Bowl on the taxpayers' dime,"
I am pretty sure the Super Bowl will be unaffected by this...
As far as the article goes, US Airways can move on. The "major" carriers have lost touch with regular passengers. The charges for the bags alone are enough to make most people cringe but their sub par customer service is too much. Try changing your flight, $150 just to get the process started.
Triplex72
That $150 fee for ANYTHING is terrible! I had used mileage on American to come back to Chicago for Thanksgiving. Well, I didn't need the ticket any longer since I am living back in Illinois so I called to cancel the reservation. They told me there would be no charge for me to rebook the flight at another time - Las Vegas to Chicago. I said I DON'T need a flight from Vegas to Chicago but how about a Chicago/Vegas flight. They said no, I would have to pay the $150 and whatever the difference would be AND I would have had to book right then and there. Well, hell, I don't know when I 'll be going back to Vegas; I thought if I could use it next summer, that would be fine, but I had no date in my mind.
Then they said I can put back the mileage into my account - for that $150 fee! I lost it at that point and told them they have to be kidding. I was putting the mileage, mileage that wasn't used, into my account and why should I have to pay??? Chances are, if I used the mileage again, I'd have to pay something since very rarely does that mileage not come without some sort of fee (it was only 27,000 miles and all I had to pay was $10 tax for that Vegas to Chicago ticket). I ended up losing all the mileage.
I hope Amtrak makes a big comeback! It will show the airlines where they can stick their fares and their baggage fees! It costs $302 round trip from Chicago to Kingman, AZ and that includes the fancy schmancy bus that takes you from Kingman to Las Vegas. The train also takes 36 hrs. And what a ride that must be!!
The main point I got out of this article is that Las Vegas is a very low profit destination for any airline because so many of the Las Vegas visitors won't fly unless the price is right. I fully agree with this assessment. If the casinos were more profitable right now, they could subsidize the airline to encourage more flights. Unfortunately, casinos are suffering in this recession as much as the airlines. It may be years before tourists, after reaping the benefits of low fares to Las Vegas, will be willing to spring for higher air fares. I don't think people are ever going to be as free with their money as they were before 2008. The casinos had better soon come up with some way to enhance the gaming experience so that their customers are willing to pay more to get to Las Vegas (hey, how about looser slots?).
I used to fly the Monterey to Vegas every Friday night at 8PM...That ended around Fall 2007...It was busy...My next connection was the Red Eye to Philly from Vegas. ...Very crowded in the A Terminal...US Air is positioning itself for a major comeback..Phoenix, and Philly rock for US Air!