NEW YORK – The six largest U.S. airlines, hammered by five years of brutal losses, have streamlined their fleets and are flying far fewer planes, helping them stage a recovery as they focus on profitability, The Wall Street Journal report on Monday.
Improving financial results posted by seven of the 10 big U.S. carriers in recent months reflects a fundamental shift in strategy that goes beyond trying to wrest concessions from airlines' unions, the newspaper reported.
After doggedly pursuing market share at any cost, the big carriers are now focusing on the profitability of each route and flight, the Journal said.
The so-called legacy airlines — AMR Corp.'s (AMR), Continental Airlines (CAL), Delta Air Lines Inc. (DALRQ), UAL Corp. (UAUA), Northwest Airlines Corp. (NWACQ) and US Airways Group Inc. (LCC) — have abandoned many of the tactics that weakened them.
The legacy carriers are increasingly unwilling to fly half-empty aircraft for the sake of feeding their nationwide networks to stay competitive, the newspaper said.
UAL Corp. emerged from bankruptcy four months ago, while Delta and Northwest are restructuring under Chapter 11 protection from creditors. US Airways was formed last year by a merger of bankrupt US Airways and America West Airlines.
New statistics for 2005 show the legacy carriers' combined fleet was 2,747 aircraft, down 21 percent from 3,469 at the end of 2000, according to Air Transport Association data.
With the cuts in capacity and strong demand, the big carriers are enjoying the strongest pricing power in five years, and for the first time are passing on a substantial share of high fuel costs to customers, the Journal said.
Last year, U.S. airlines filled an average 77.6 percent of their domestic and overseas flights — the highest level since 1946 — up from 75.5 percent in 2004, according to the ATA.
The association's chief economist predicts the percentage will rise to about 85 percent this summer, potentially the highest ever recorded, it said.