ucla transportation symposium lake arrowhead, ca
TRANSCRIPT
UCLA Transportation SymposiumLake Arrowhead, CA
State of Industry – 40% of the industry capacityis in or heading towards bankruptcy
S&P rating is the Corporate credit rating as of July 31, 2004; Capacity based on Q2 ‘04
Share ofIndustry In
S&P Rating Capacity Bankruptcy?
Southwest Airlines A 8.6% No
Alaska Airlines BB- 2.6% No
JetBlue Airways Corp. BB- 2.1% No
Northwest Airlines Corp. B 10.4% No
Continental Airlines B 9.9% No
AirTran Holdings Inc. B- 1.3% No
America West Holding Corp. B- 3.5% No
AMR Corp. B- 20.2% No
Delta Air Lines Inc. CCC 15.2% Likely
US Airways Group Inc. CCC 6.2% Yes
ATA Holdings Corp. CCC 2.4% Likely
UAL Corp. D 16.6% Yes
Frontier Airlines Inc. N/A 1.0% No
Industry Recap Post 9/11
Airlines in Turmoil:AMR to Reduce Pilot Force by 20%
UAL Will Lay Off 1,500 WorkersAs Part of Cost-Cutting
• 140,000 Employees have been furloughed
• 800 Aircraft have been parked
Source: Merrill Lynch - August 30, 2004. Data for major airlines only, excluding government compensation
$ (
billi
ons)
-$6.2 Billion
-$7.7 Billion
-$5.4 Billion
-$3.3 Billion
-8
-6
-4
-2
0
2
2001 2002 2003 2004 forecast
Industry Net Losses
7%8%
10%
14%
16%
18% 19% 18% 19%19%
21%
23%24%
26%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2006*
Lo
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os
t C
arr
iers
' Ma
rke
t S
ha
re o
fD
om
es
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D P
as
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ers
Source: U.S. DOT DB1A database. LCC’s include: AirTran, Frontier, JetBlue and Southwest.Majors includes: Alaska, American, America West, Continental, Delta, Northwest, United and US Airways.* Merrill Lynch Research forecast
Low Cost Carriers’ Share of Passengers
And how do we surviven when -And how do we surviven when -
??
It’s all about It’s all about having an having an edge -edge -
A point of A point of differentiationdifferentiation
Airport of the Future
Alaska Operations InitiativesJuneau, Alaska
37
70 70
111120
138 140
172
0
30
60
90
120
150
180
Mixed FleetSeats
Air CargoAir CargoPost 9/11Post 9/11
Clawing for CustomersClawing for Customers Loss of walk-up customers.Loss of walk-up customers. Changes in security measures.Changes in security measures. Irresponsible pricing.Irresponsible pricing. Shift to Ground Transportation.Shift to Ground Transportation. C0ntrol Cost. C0ntrol Cost.
737-200 Combi Replacement
737-400 Combi Configuration
Cargo Door 70 Passenger
Seats
Fixed Bulkheads
4 Cargo Igloos
Moveable BallastStorage
30% more cargo capacity15-20% more passengers
Maintaining your competitive edge.
19991999 20002000 20012001 20032003 20042004