U.S. Airways: Business Analysis and Decomposition
The objectives of this study are first to explore exactly what has culminated in terms of the financial strategy of U.S. Airways over the past few years. Trending in the airline industry certainly is one of a bevy of factors propelling U.S. Airways. The Bankruptcy was filed as will be revealed in this study. In light of the dynamic changes that are indicated in the industries strategy and financial facts the study of this case is certain to yield information worth noting.
The research as to what has happened and is occurring was interesting and did yield quiet a bit of information that is pertinent to the study.
Various and Sundry Factors Affecting U.S. Airways:
The factors that are affecting U.S. Airways and in fact affecting the entire airlines business are the following:
Tighter security since 911 which results in:
More invasive screening
Longer waits to board the planes
Higher fuel costs for the airlines.
Worker refusing lowered wages.
International Upheaval
Environmental Factors
More standards for the airlines to meet.
Competition is on the increase in the airlines industry due to globalization.
Higher insurance rates for the airlines.
In general, the airline’s costs are climbing higher while their income is falling lower due to the expenses that have increased since 911 in terms of operating expenses. Speaking generally of those individuals who are considered regular customers with the airlines, the more invasive screening, the missing of personals that were in cargo luggage as well as the overall change of environment in taking an airline flight has customers opting for other sources of travel accommodation
II. Evidence Supporting These Reasons for Failing Airlines Businesses:
In a news report dated November 11, 2004 it was reported that:
11/11/2004 Delta to cut 6,000+ jobs
Delta will cut between 6000 and 6,900 jobs during the next 18 months and those remaining will have to take a 10% pay cut and loose some employee benefits. The airline will issue up to 75 million shares of common stock, most of which will go to pay employees as part of a new incentive program. It will use an exception in the NYSE shareholder approval policy to issue the shares. Of the total number of employees to be laid off, 1,500 to 1,800 will be administrative staff, between 1,600 and 2,000 are technical employees and between 2,900 and 3,100 will be customer-service employees. The layoffs will start January 1 and continue for 18 months. I guess we can expect even less customer service from Delta in the future.
Further reported in a news report on October 26, 2004, was that:
UA to send 650 reservation jobs to India United plans to send about 650 reservation jobs to India, saying it will help make the airline more responsive to customers seeking competitive fares. In other words you want a cheap fare then deal with someone in India who has no understanding of the airline and pay $5 for the privilege. The carrier is closing a call center in Bloomington, in.”
It has also been recently reported that overweight people may have to pay more for flights because they cost more per pound to fly as is stated in the following report excerpt from October 20, 2004:
Americans’ expanding waistlines are adding to the airlines’ already rising fuel bills, according to a story in the Atlanta Journal Constitution. A report by physicians at the Centers for Disease Control and Prevention says the average American gained 10 pounds during the 1990s. The extra weight translated to 350 million extra gallons of fuel used by airlines. The cost? About $275 million in 2000 alone, the report says — and that was when jet fuel cost less than half today’s price. The higher fuel consumption also resulted in an extra 3.8 million tons of carbon dioxide and smaller amounts of other pollutants, it adds. The report, published in this month’s American Journal of Preventive Medicine, focuses on overlooked economic and health consequences of obesity, said Dr. Andrew Dannenberg, who studies how the man-made world affects health.
That however. is not the report containing the most information about overweight individuals flying. It seems that overloading may have been a common airline practice until something occurred to change that as evidenced in the following report:
The Federal Aviation Administration announced yesterday that passengers flying small planes will have to give their weight before boarding small commuter and regional planes carrying 10 to 19 passengers. This is part of a month-long survey to determine whether current weight estimates are accurate. Anyone refusing to give his or her weight could be barred from the flight. Investigators are looking at excess weight and elevator malfunction as possible contributing causes of the January 8th crash of a 19 seat Beech 1900 turboprop.. Maximum take-off weight for the Beech that crashed was just over 17,000 pounds and the plane was within 100 pounds of that figure.”
Individuals flying should be warned that anything stashed underneath the clothes will be seen, even the individuals private body parts as evidence in the following report from September 10, 2004:
new X-ray machine at London’s Heathrow has been attacked by civil liberties groups as a “voyeur’s charter.” The machine uses low-level radiation to see through clothing, producing an anatomically detailed black and white image of the body underneath. The machine is capable of detecting solid objects concealed under clothing. Passengers are picked at random and are asked if they will volunteer to be scanned by the machine. A spokesperson for the TSA said they are considering using the machines at U.S. airports said there are a number of privacy issues that need to be addressed before starting tests in the U.S.”
US Airways filed for bankruptcy on September 12, 2004 according to an online report entitled ” U.S. Airways Files for Bankruptcy.” In a report that followed on October 19,004 entitled, “U.S. Airways Outlines Turnaround ” the company is based in Arlington, Virginia. Stated in the report is that:
Besides cutting costs, it is revamping its route structure to emphasize point-to-point flying, rather than the more expensive hub-and-spoke system that gained popularity after airline deregulation”
US Airways is using the following strategies in maintaining and forward propelling growth for the company:
1. Philadelphia Changing Station: flights will be spaced out with a new hub-and-spoke operation making it possible to ground worker in the handling of more flights.
2. • Seating more from DCA: Routes have been rearranged allowing the larger regional jets flight out of Reagen National in Washington. A bigger jet calculates to 40% more capacity on flight lists.
3. • Bigger in Boston and New York: Both Logan and La Guardia will receive bigger jet and the resulting larger capacity with the alteration of timing in shuttles between New York, Washington and Boston.
Conclusion:
The company hopes that the “point-to-point” schedule will alleviate some of the delays that are normally experienced due to inclement weather. U.S. Airway had crunched down and tightened its’ belt in order to stay in business. The price of petroleum, the terrorism threat, the weather, the war, overweight planes crashing and the overall environment of the airlines industry are all contributing factors. The airlines industry is in a very bad spot however, U.S. Airways is paying its way so to speak and does not intend to be extinct in the near future. This logical and practical approach may very well be the approach that is demanded at this point in time in the airlines industry.
Bibliography
Bigger travelers add to airline fuel woes (2004) located [Online] at: John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
01/28/2003 FAA Wants to Watch Your Weight. John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
11/10/2004 New x-ray machine sees all. John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
Online] at (http://www.consumeraffairs.com/news04/us_air_turnaround.html)
John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
10-11-04 Bigger travelers add to airline fuel woes.
01/28/2003 FAA Wants to Watch Your Weight. John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
11/10/2004 New x-ray machine sees all. John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
Online] at (http://www.consumeraffairs.com/news04/us_air_turnaround.html)
John Deere Travel News Report [Online] at http://www.shortstravel.com/newjdt/index.cfm?refer=news%2Findex.cf
US Airways
