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American still losing millions daily, Carty says
Dateline: Wednesday December 12, 2001
American Airlines still "is losing millions of dollars every day" and will report a "very, very big loss for the fourth quarter and full year," Chairman and CEO Don Carty told employees.
Carty said that although forward bookings through early Jan. "look promising," the airline is selling seats at "incredibly low prices" and load factors "aren't anywhere near what they need to be, even to break even."
American's position--and that of most US Major network airlines--actually may be worse than is generally recognized. The combination of capacity cuts without a corresponding reduction in fixed costs, new security costs and rock-bottom fares may have created a situation in which profitability simply is unattainable given current demand in the recessionary economy.
According to a recent report by Fitch, the industry's estimated breakeven load factor for the fourth quarter is 75%, up from 67% in the second quarter ended June 30. Fitch estimated American's fourth-quarter breakeven load factor at 85%, a figure that arguably is unachievable for more than a few days at a time even during periods of extreme demand. American's load factor in Nov. was 65.6% and in Oct. it was 59.6%.
Dateline: Wednesday December 12, 2001
American Airlines still "is losing millions of dollars every day" and will report a "very, very big loss for the fourth quarter and full year," Chairman and CEO Don Carty told employees.
Carty said that although forward bookings through early Jan. "look promising," the airline is selling seats at "incredibly low prices" and load factors "aren't anywhere near what they need to be, even to break even."
American's position--and that of most US Major network airlines--actually may be worse than is generally recognized. The combination of capacity cuts without a corresponding reduction in fixed costs, new security costs and rock-bottom fares may have created a situation in which profitability simply is unattainable given current demand in the recessionary economy.
According to a recent report by Fitch, the industry's estimated breakeven load factor for the fourth quarter is 75%, up from 67% in the second quarter ended June 30. Fitch estimated American's fourth-quarter breakeven load factor at 85%, a figure that arguably is unachievable for more than a few days at a time even during periods of extreme demand. American's load factor in Nov. was 65.6% and in Oct. it was 59.6%.