BA & Virgin in trouble...
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BA & Virgin in trouble...
After a staff announcement by Mr Eddington it now turns out due to the US situation things are not looking too good...BA's main core business and long term stratagy is the long haul market which has been worse hit.
The following have already been implemented:
All training courses/recruitment has stopped.
x2 B737 already scheduled to be returned when the leases are due for renewal and more to follow...
I also heard that Vigin have looked into the cost of "mothballing" the classic fleet and I understand the creditors wanted the Airbus fleet returned..
A definate downturn in the industry, personally I think with Virgins Singapore backing and the money BA have in the bank both will come out on the other side but I fear for the small operators.
Any Comment.
The following have already been implemented:
All training courses/recruitment has stopped.
x2 B737 already scheduled to be returned when the leases are due for renewal and more to follow...
I also heard that Vigin have looked into the cost of "mothballing" the classic fleet and I understand the creditors wanted the Airbus fleet returned..
A definate downturn in the industry, personally I think with Virgins Singapore backing and the money BA have in the bank both will come out on the other side but I fear for the small operators.
Any Comment.
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BA depends on its high yield transatlantic profits to subsidise many of its less profitable routes elsewhere - and with the sharp decrease in traffic that is now widely expected (I've seen forecasts of as much as 50 - 67% over the next couple of years compared to last year) coupled with a global recession that will be considerably worse than was expected last week, I suspect that the BA five years from now will be considerably different to the one we see today.
My personal view is that VS are unlikely to survive as long as 12 months - Virgin's lifeblood is its cashflow and any serious disruption in it is likely to bring the whole house of cards crashing down. They too are over-dependent on transatlantic services; their South African and Far Eastern routes are marginal at best and I hear that the Indian and Asian routes are loss makers. On top of that, VEX is losing money hand over fist but they are hanging on hoping to pick up SN's European routes if and when that company finally bites the dust. Virgin Blue has been doing fairly well and obviously stands to gain from Ansett's collapse.
Prior to this week's terrible events, the value of SQ's holding in VS had already dropped by half and in any case SQ have the maximum foreign ownership permitted by law - so it's unlikely that any bail-out will come from that source. In any case, they will be too busy protecting their own position following the Australasian airline shakeup that's already happened and is to come.
My belief is that it will be the niche players and the regionals - especially low cost ones - that will make it through. Any airline (or indeed, any business) with high overheads will not make it.
This from Business AM:
My personal view is that VS are unlikely to survive as long as 12 months - Virgin's lifeblood is its cashflow and any serious disruption in it is likely to bring the whole house of cards crashing down. They too are over-dependent on transatlantic services; their South African and Far Eastern routes are marginal at best and I hear that the Indian and Asian routes are loss makers. On top of that, VEX is losing money hand over fist but they are hanging on hoping to pick up SN's European routes if and when that company finally bites the dust. Virgin Blue has been doing fairly well and obviously stands to gain from Ansett's collapse.
Prior to this week's terrible events, the value of SQ's holding in VS had already dropped by half and in any case SQ have the maximum foreign ownership permitted by law - so it's unlikely that any bail-out will come from that source. In any case, they will be too busy protecting their own position following the Australasian airline shakeup that's already happened and is to come.
My belief is that it will be the niche players and the regionals - especially low cost ones - that will make it through. Any airline (or indeed, any business) with high overheads will not make it.
This from Business AM:
Attack on America: Airspace reopens but £7bn losses forecast
by Richard Allan
Published: 00:05 GMT, Sep 14, 2001
THE US opened its airspace last night but the two-day closure and likely impact of the
terrorist attacks on passenger revenue could cost the industry worldwide at least £7bn.
Standard & Poor's, the ratings agency, has placed all major US airlines, British Airways (BA) and Air Canada on credit-watch with negative implications.
Several investment banks downgraded the leading airlines and the 266-member International Air Transport Association said that the industry faced immediate losses and extra costs that could reach £6.8bn. About 4,000 of the world's 12,000 commercial airlines were grounded by the closure of US
airspace.
Standard & Poor's said: "The likely adverse impact on passenger demand, spreading to leisure travel from the already depressed business travel market ... is mainly because of fears regarding further acts of terrorism."
JP Morgan downgraded BA to "market perform" from "buy", but said that its cuts in capacity and focus on higher-yield fares could lead to a recovery in earnings.
Schroder Salomon Smith Barney set a new price target for BA of 215p, down from 400p. It
forecasted an immediate 20% fall in passenger demand for air travel, leading to further capacity reductions and fewer orders for new planes.
A fall in demand would cause airlines to review existing and planned routes, which include Continental Airlines' proposed Edinburgh-Newark service.
Meanwhile, the government will lift its ban on planes flying over central London from midnight tomorrow. London City Airport, shut since Tuesday because of the restrictions, will open again today but will follow special flight paths until tomorrow.
British European flights from Scotland to London City have been cancelled and ScotAirways has operated a reduced service to Biggin Hill airfield.
New security measures at UK airports include requiring passengers changing planes to claim their bags and check in all over again rather than remain in transit.
The increase in security will also affect the low-cost carriers such as Go, Ryanair and easyJet, whose business models depend on using their planes as many times as possible during the working day.
EasyJet has cancelled services to cope with extended check-in times and some insiders fear that the airlines will have to scrap their expansion plans or cut services.
The US transportation secretary, Norman Mineta, said that airports would reopen from 4pm yesterday but cautioned that flights would resume on a case-by-case basis.
Some planes diverted from the US to Canada and Bermuda returned to the UK last night but it will be several days before the backlog of diverted and cancelled transatlantic flights can be cleared. Some UK-US flights may resume today.
BA closed down 11.75p to 196.25p, the airports operator BAA was 2p lower at 534p and easyJet fell 10.5p to 311.5p. Ryanair dropped 16.5p to 517.5p.
n Passenger numbers increased by 2% at BAA's seven UK airports last month but north Atlantic traffic fell by 3.6% because there were fewer US visitors.
BAA expects this month's figures, particularly on transatlantic services, to be significantly affected by the closure of US airspace after Tuesday's attacks.
Among the seven airports, Stansted and Edinburgh again led the way in percentage growth, up by 17.3% and 8.2% respectively compared to the same period last year.
Glasgow rose by 6.6% and Aberdeen by 3.7%. Heathrow, the main hub for trans-atlantic flights, was down 1.8%.
by Richard Allan
Published: 00:05 GMT, Sep 14, 2001
THE US opened its airspace last night but the two-day closure and likely impact of the
terrorist attacks on passenger revenue could cost the industry worldwide at least £7bn.
Standard & Poor's, the ratings agency, has placed all major US airlines, British Airways (BA) and Air Canada on credit-watch with negative implications.
Several investment banks downgraded the leading airlines and the 266-member International Air Transport Association said that the industry faced immediate losses and extra costs that could reach £6.8bn. About 4,000 of the world's 12,000 commercial airlines were grounded by the closure of US
airspace.
Standard & Poor's said: "The likely adverse impact on passenger demand, spreading to leisure travel from the already depressed business travel market ... is mainly because of fears regarding further acts of terrorism."
JP Morgan downgraded BA to "market perform" from "buy", but said that its cuts in capacity and focus on higher-yield fares could lead to a recovery in earnings.
Schroder Salomon Smith Barney set a new price target for BA of 215p, down from 400p. It
forecasted an immediate 20% fall in passenger demand for air travel, leading to further capacity reductions and fewer orders for new planes.
A fall in demand would cause airlines to review existing and planned routes, which include Continental Airlines' proposed Edinburgh-Newark service.
Meanwhile, the government will lift its ban on planes flying over central London from midnight tomorrow. London City Airport, shut since Tuesday because of the restrictions, will open again today but will follow special flight paths until tomorrow.
British European flights from Scotland to London City have been cancelled and ScotAirways has operated a reduced service to Biggin Hill airfield.
New security measures at UK airports include requiring passengers changing planes to claim their bags and check in all over again rather than remain in transit.
The increase in security will also affect the low-cost carriers such as Go, Ryanair and easyJet, whose business models depend on using their planes as many times as possible during the working day.
EasyJet has cancelled services to cope with extended check-in times and some insiders fear that the airlines will have to scrap their expansion plans or cut services.
The US transportation secretary, Norman Mineta, said that airports would reopen from 4pm yesterday but cautioned that flights would resume on a case-by-case basis.
Some planes diverted from the US to Canada and Bermuda returned to the UK last night but it will be several days before the backlog of diverted and cancelled transatlantic flights can be cleared. Some UK-US flights may resume today.
BA closed down 11.75p to 196.25p, the airports operator BAA was 2p lower at 534p and easyJet fell 10.5p to 311.5p. Ryanair dropped 16.5p to 517.5p.
n Passenger numbers increased by 2% at BAA's seven UK airports last month but north Atlantic traffic fell by 3.6% because there were fewer US visitors.
BAA expects this month's figures, particularly on transatlantic services, to be significantly affected by the closure of US airspace after Tuesday's attacks.
Among the seven airports, Stansted and Edinburgh again led the way in percentage growth, up by 17.3% and 8.2% respectively compared to the same period last year.
Glasgow rose by 6.6% and Aberdeen by 3.7%. Heathrow, the main hub for trans-atlantic flights, was down 1.8%.
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Maybe time for VS & BA to consider merger talks. Consolidate US and Canadian routes from EGLL. Both would benefit from savings in handling, maintenance and training. Down size both cabin crew and flight crew and conbine cargo. Both BA & VS could reduce fleets and therefore address the debt mountain which will keep the banks and market makers happy. Yep, I can see it now the launch of British Virgin Airways. Has a nice ring about it don't you think.
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I Work for VS as well and have heard nothing of the sort. We have resumed transatlantic flights today (15th).Some people seem to be stirring things up for no good reason.
It might be worth pointing out to that mine of accurate information, guvnor, that VS made a profit last year whereas certain others did not,so his forecast of VS collapsing inside of 12 months whilst others survive is a little premature at this point in time.
As to the post claiming that the classics are to be mothballed whilst the airbus fleet is returned to the leasing company,where on earth did that information come from?
After such a tragedy,could we not at least wait until events unfold a little further before gleefully predicting the collapse of a major carrier. The prospect of 700+ pilots unemployed would affect the whole market as well as being a dreadful blow for those affected on top of the events of a truly awful week for the whole world.
Verifiable facts please ,not uninformed speculation.
It might be worth pointing out to that mine of accurate information, guvnor, that VS made a profit last year whereas certain others did not,so his forecast of VS collapsing inside of 12 months whilst others survive is a little premature at this point in time.
As to the post claiming that the classics are to be mothballed whilst the airbus fleet is returned to the leasing company,where on earth did that information come from?
After such a tragedy,could we not at least wait until events unfold a little further before gleefully predicting the collapse of a major carrier. The prospect of 700+ pilots unemployed would affect the whole market as well as being a dreadful blow for those affected on top of the events of a truly awful week for the whole world.
Verifiable facts please ,not uninformed speculation.
After all, this forum is called the Professional Pilots' RUMOUR Network and not the Professional Pilots' FACTS Network. Hopefully most people are aware of this fact and don't believe the bull spouted by self professed experts and wind up merchants such as Guv.
BTW, I'm another VS employee who has been to work this morning and heard no such facts!
[ 15 September 2001: Message edited by: Dan Winterland ]
BTW, I'm another VS employee who has been to work this morning and heard no such facts!
[ 15 September 2001: Message edited by: Dan Winterland ]
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It is hardly surprising that you have not heard any rumours yet , however ,once the dust settles, so to speak, expect there to be further developments.
This does not confine itself to VS alone but will affect the entire aviation industry.
Do not expect to come out of this unscathed.
This does not confine itself to VS alone but will affect the entire aviation industry.
Do not expect to come out of this unscathed.
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Gentlemen
Unfortunately this is only the start, I am unaware of, in my company, any decisions having been made, but with the share price tumbling I do fear the worst.
The Gulf war was thankfully short and proved to be recoverable, this time we've got to firstly find the enemy, find a response that can publisised as a victory and then start to recover.
If we can do this before we are all redundant of bankrupt we'll be able too pay the morgage, if not junior trash like myself will be looking for handouts.
But with Heathrow accounting for 10% of GDP, I remain hopeful that the Government will help. If it don't then there might be far fewer jobs in the entire economy to go around.
Unfortunately this is only the start, I am unaware of, in my company, any decisions having been made, but with the share price tumbling I do fear the worst.
The Gulf war was thankfully short and proved to be recoverable, this time we've got to firstly find the enemy, find a response that can publisised as a victory and then start to recover.
If we can do this before we are all redundant of bankrupt we'll be able too pay the morgage, if not junior trash like myself will be looking for handouts.
But with Heathrow accounting for 10% of GDP, I remain hopeful that the Government will help. If it don't then there might be far fewer jobs in the entire economy to go around.
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Hugh, Dan & Northern Boy please feel free to e-mail me ref Moon's comments, however, I was in the same briefing as Moon and can confirm that this was mentioned as a "worse scenario". You would be very naive to think any different and although the guy who mentioned this has been slagged off, he was only being truthful. Any further info ref the company should be dealt with either through the VS forum or through person to person e-mail, as I say feel free to contact me.
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ermmm not trying to put too much of a damper on things but i think you will find that most of mr bransons businesses are propped up by by the profits/cash flow from the transatlantic routes.......read into that what you will
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The situation is not so black and white as most would presume. Yes VS did make a paper profit last year but you need to study the balance sheet.
Money is cheap at the moment with the lowest interest rates in 30 years. Businesses such as VS and BA are taking advantage of this entitlement to increase growth at the expense of over-extending the debt in lower trading conditions. However, over borrowing is a common problem amongst large companies, just look at BT, their debt and share portfolio. The fact remains that both BA and VS have massive debts that are underwritten by mid-range income figures (RMS). The problem is that the resent events will extend in no doubt beyond those financial projections in lost revenue. So it remains to see how long a private company such as VS will remain credit worthy in terms of city market makers. If all go’s pear shaped April 2002.
Money is cheap at the moment with the lowest interest rates in 30 years. Businesses such as VS and BA are taking advantage of this entitlement to increase growth at the expense of over-extending the debt in lower trading conditions. However, over borrowing is a common problem amongst large companies, just look at BT, their debt and share portfolio. The fact remains that both BA and VS have massive debts that are underwritten by mid-range income figures (RMS). The problem is that the resent events will extend in no doubt beyond those financial projections in lost revenue. So it remains to see how long a private company such as VS will remain credit worthy in terms of city market makers. If all go’s pear shaped April 2002.
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An interesting point, which is worth stating amongst all the doom and gloom. The Daily Telegraph's travel section today reports that, contrary to expectations, short and mid-term tourist bookings to the USA are holding up very well. It quotes BA Holidays and ABTA in this, so I see no reason to disbelieve it - it also says that holidays to the Middle East, on the other hand, are being cancelled or changed big time.
Tourist travel won't substitute for high-revenue business travel, but it's encouraging to see that not everyone's abandoning us. In the medium and longer term, things will return to normal. We (the UK long haul industry) just have to get through the next few weeks. That will probably mean some indulgence from the banks, and possibly even some Government loan guarantees, but there is no reason to suggest that the long-term future of the industry as a whole is at risk.
As I said to the Guvnor in another thread, if you forecast the end of the world for long enough, eventually you'll be right. But not yet.
Tourist travel won't substitute for high-revenue business travel, but it's encouraging to see that not everyone's abandoning us. In the medium and longer term, things will return to normal. We (the UK long haul industry) just have to get through the next few weeks. That will probably mean some indulgence from the banks, and possibly even some Government loan guarantees, but there is no reason to suggest that the long-term future of the industry as a whole is at risk.
As I said to the Guvnor in another thread, if you forecast the end of the world for long enough, eventually you'll be right. But not yet.
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Things may not be as bleak for British Airways and Virgin as they at first appear, even if they will be losing some tourist traffic.
The Continetal press release on the scaling back of ops cites some of the reasons as;
"Continental has seen a drastic drop in bookings in an already declining economy. In addition, many corporations have instructed their employees to avoid U.S airlines."
So it appears US carriers are losing a large proportion of their Premium-Cabin traffic.
Flipside of the coin for "foreign" airlines is that it's likely to assume most of these business trips will still have to be made, and airlines like BA and Virgin will be picking up First/Business Class pax who may othewise have travelled with a US carrier
The Continetal press release on the scaling back of ops cites some of the reasons as;
"Continental has seen a drastic drop in bookings in an already declining economy. In addition, many corporations have instructed their employees to avoid U.S airlines."
So it appears US carriers are losing a large proportion of their Premium-Cabin traffic.
Flipside of the coin for "foreign" airlines is that it's likely to assume most of these business trips will still have to be made, and airlines like BA and Virgin will be picking up First/Business Class pax who may othewise have travelled with a US carrier
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There IS doom and gloom in the US. I doubt that we will we come out of it unscathed either.
This quote is from CBS.
Midway, who applied for Chapter 11 in August, hoping that they would find a buyer, gave up after the attack, ceased operations and laid off their staff.
I don't believe the United States will be the only country affected in the aftermath of this barbaric act. From which it will takes many months to recover.
In fact, I would not want to own an airline right now, and I would guarantee that Chairmen, MD's and top management will be in meetings all weekend. Grim stuff!
This quote is from CBS.
The White House said Saturday President Bush was "concerned" about the financial problems facing commercial carriers in the wake of the attacks, which have slashed demand for air travel.
Earlier in the day Continental Airlines said it is cutting its flight schedule by 20 percent and furloughing 12,000 employees — more than one fifth of its payroll — because of an expected drop in air travel following the terrorist attacks.
Northwest Airlines also says it plans to reduce its flight schedule by 20 percent, effective October first. Northwest president Doug Steenland wouldn't say how many employees might be affected by the cuts.
Earlier in the day Continental Airlines said it is cutting its flight schedule by 20 percent and furloughing 12,000 employees — more than one fifth of its payroll — because of an expected drop in air travel following the terrorist attacks.
Northwest Airlines also says it plans to reduce its flight schedule by 20 percent, effective October first. Northwest president Doug Steenland wouldn't say how many employees might be affected by the cuts.
I don't believe the United States will be the only country affected in the aftermath of this barbaric act. From which it will takes many months to recover.
In fact, I would not want to own an airline right now, and I would guarantee that Chairmen, MD's and top management will be in meetings all weekend. Grim stuff!
White House to Hold Crisis Talks with Airlines
By Adam Entous
WASHINGTON (Reuters) - With airlines warning they face a financial crisis, the Bush administration said it would hold urgent talks next week with executives at carriers hard hit by Tuesday's hijack attacks, but stopped short of backing a multibillion-dollar plan to shore up their finances.
White House spokesman Ari Fleischer (news - web sites) said on Saturday that President Bush (news - web sites) was "concerned'' about the financial problems facing commercial carriers in the wake of the deadly attacks, which have undercut demand for air travel and saddled airlines with the massive cost of beefing up security.
In response, aides said Transportation Secretary Norman Mineta (news - web sites) planned to meet with airline executives early next week. An administration official, who spoke on condition of anonymity, said Mineta and the executives would discuss the industry's financial woes as well as "a full range of options from which to act.''
Separately, James Hoffa, president of the largest union of transportation workers in North America, requested a meeting with Bush to "ensure the stability of the nation's air transportation system,'' the Teamsters said on Saturday.
The White House and Congress are under increasing pressure to aid airlines that have suffered losses due to airport closures and the fall-off in demand stemming from Tuesday's terror attacks and the weakened U.S. economy.
CONTINENTAL, NORTHWEST CUT BACK
Earlier on Saturday, Continental Airlines Inc., the nation's fifth largest carrier, said it would reduce its long-term flight schedule by about 20 percent and would be forced to lay off about 12,000 employees. The company's chief executive warned that the Houston-based carrier could file for bankruptcy protection if Congress fails to provide assistance.
Northwest Airlines Corp., the world's fourth largest commercial carrier, later said it would cut its systemwide flight schedule by 20 percent by Oct. 1 and would also review its overall staffing needs.
Airline industry executives have told members of Congress they may lose $10 billion to $12 billion this year -- their biggest losses in history. After announcing its own cutbacks, Continental predicted 100,000 layoffs industry-wide and forecast a 50 percent drop in traffic.
"The airlines were facing serious problems before these incidents and now they're facing problems not of their own making. So we're obviously pretty sympathetic to that and looking at it very closely,'' White House spokeswoman Claire Buchan said.
Lawmakers are already busy drawing up plans to help carriers weather the crisis.
Several top-ranking members of the House of Representatives are pressing for passage of legislation authorizing $2.5 billion in grants and $12.5 billion in loan guarantees to aid all U.S. airlines that have sustained losses, not just AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, whose aircraft were hijacked in the attacks.
But so far the White House has balked at endorsing the aid package, which supporters say would help mitigate the industry's losses and send a signal to financial markets reopening next week that Congress would try to cushion the economic effects of the devastating assaults.
HOUSE EFFORT SET BACK
Efforts overnight to push the financial aid package through the Republican-controlled House failed after several lawmakers objected to the timing of the initiative, so soon after the attacks that left thousands missing and hundreds confirmed dead in New York, Washington and Pennsylvania.
"Now before all the bodies are removed, all the dust is settled, all the fires extinguished, there are those lining up here at the Capitol door, at the public treasury, asking to receive some public subsidy,'' Rep. Lloyd Doggett (news - bio - voting record), a Texas Democrat, complained.
But House supporters of the aid package said they may try again next week, though votes were not expected before Thursday.
In the Senate, Commerce Committee leaders were crafting legislation that would limit lawsuits against United Airlines and American.
In a statement, Sen. John McCain (news - bio - voting record) of Arizona, the committee's ranking Republican, promised to "do everything in my power to ensure that Congress will act to stabilize the financial condition of the airlines as we begin to rebuild from this tragedy and restore our nation's confidence in flying.''
Administration officials said they were eager to work with lawmakers on these and other proposals, but needed time to assess the financial state of individual carriers and to formulate a response.
"Let's take some time to talk to these (airline executives) and analyze it,'' one official said
By Adam Entous
WASHINGTON (Reuters) - With airlines warning they face a financial crisis, the Bush administration said it would hold urgent talks next week with executives at carriers hard hit by Tuesday's hijack attacks, but stopped short of backing a multibillion-dollar plan to shore up their finances.
White House spokesman Ari Fleischer (news - web sites) said on Saturday that President Bush (news - web sites) was "concerned'' about the financial problems facing commercial carriers in the wake of the deadly attacks, which have undercut demand for air travel and saddled airlines with the massive cost of beefing up security.
In response, aides said Transportation Secretary Norman Mineta (news - web sites) planned to meet with airline executives early next week. An administration official, who spoke on condition of anonymity, said Mineta and the executives would discuss the industry's financial woes as well as "a full range of options from which to act.''
Separately, James Hoffa, president of the largest union of transportation workers in North America, requested a meeting with Bush to "ensure the stability of the nation's air transportation system,'' the Teamsters said on Saturday.
The White House and Congress are under increasing pressure to aid airlines that have suffered losses due to airport closures and the fall-off in demand stemming from Tuesday's terror attacks and the weakened U.S. economy.
CONTINENTAL, NORTHWEST CUT BACK
Earlier on Saturday, Continental Airlines Inc., the nation's fifth largest carrier, said it would reduce its long-term flight schedule by about 20 percent and would be forced to lay off about 12,000 employees. The company's chief executive warned that the Houston-based carrier could file for bankruptcy protection if Congress fails to provide assistance.
Northwest Airlines Corp., the world's fourth largest commercial carrier, later said it would cut its systemwide flight schedule by 20 percent by Oct. 1 and would also review its overall staffing needs.
Airline industry executives have told members of Congress they may lose $10 billion to $12 billion this year -- their biggest losses in history. After announcing its own cutbacks, Continental predicted 100,000 layoffs industry-wide and forecast a 50 percent drop in traffic.
"The airlines were facing serious problems before these incidents and now they're facing problems not of their own making. So we're obviously pretty sympathetic to that and looking at it very closely,'' White House spokeswoman Claire Buchan said.
Lawmakers are already busy drawing up plans to help carriers weather the crisis.
Several top-ranking members of the House of Representatives are pressing for passage of legislation authorizing $2.5 billion in grants and $12.5 billion in loan guarantees to aid all U.S. airlines that have sustained losses, not just AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, whose aircraft were hijacked in the attacks.
But so far the White House has balked at endorsing the aid package, which supporters say would help mitigate the industry's losses and send a signal to financial markets reopening next week that Congress would try to cushion the economic effects of the devastating assaults.
HOUSE EFFORT SET BACK
Efforts overnight to push the financial aid package through the Republican-controlled House failed after several lawmakers objected to the timing of the initiative, so soon after the attacks that left thousands missing and hundreds confirmed dead in New York, Washington and Pennsylvania.
"Now before all the bodies are removed, all the dust is settled, all the fires extinguished, there are those lining up here at the Capitol door, at the public treasury, asking to receive some public subsidy,'' Rep. Lloyd Doggett (news - bio - voting record), a Texas Democrat, complained.
But House supporters of the aid package said they may try again next week, though votes were not expected before Thursday.
In the Senate, Commerce Committee leaders were crafting legislation that would limit lawsuits against United Airlines and American.
In a statement, Sen. John McCain (news - bio - voting record) of Arizona, the committee's ranking Republican, promised to "do everything in my power to ensure that Congress will act to stabilize the financial condition of the airlines as we begin to rebuild from this tragedy and restore our nation's confidence in flying.''
Administration officials said they were eager to work with lawmakers on these and other proposals, but needed time to assess the financial state of individual carriers and to formulate a response.
"Let's take some time to talk to these (airline executives) and analyze it,'' one official said
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bye the way guv, VEX is due to break even or even show profit this year, so nice try at stirring. remember, they win if SN go down and if they dont, they still have the contract as per the courts!!.
also BA is more likely to suffer from short haul than long haul at the moment, due to the low cost operators
also BA is more likely to suffer from short haul than long haul at the moment, due to the low cost operators
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From today's Sunday Times:
and
[ 16 September 2001: Message edited by: The Guvnor ]
BRITISH AIRWAYS is facing a financial crisis as it struggles with enormous debts and slumping sales in the wake of last Tuesday's terrorist attacks.
The scale of the crisis facing the industry has been underlined by Continental Airlines, the fifth largest carrier. Gordon Bethune, Continental's chairman and chief executive, said mounting losses could force most of America's leading airlines into bankruptcy.
Bethune said: "This patient is dying very quickly. We all are going to be bankrupt before the end of the year. There is not an airline that I know of that has the excess cash to handle this."
Analysts say long-haul travel, the most profitable element of BA's business, could fall by 50%. BA is already planning to return aircraft to leasing companies in an effort to cut debts of £6.4 billion. This figure dwarfs BA's market value, which has tumbled to £1.8bn. The company will also come under pressure to cut its dividend.
Company sources admitted it was planning to reduce passenger capacity, but would not say how many planes it intended to return to lessors. BA said: "It's too soon to be taking a definitive view, but it is something that the airline is looking at very closely."
Continental's grim analysis is supported by Chris Avery, aviation analyst at JP Morgan. He said: "It is highly likely that by Christmas at least two of the US majors will have declared chapter 11 bankruptcy."
General Electric, the American conglomerate with big aviation interests, has already issued a profit warning because it had insurance exposure. Airlines account for about 1% of America's economy.
BA is one of the most highly geared of the European carriers. It has already started to address its cost base, axing jobs and introducing a hiring freeze. Aviation experts say it will need to take more radical action, either grounding planes or or handing them back to lessors.
BA is not the only European carrier preparing to take such action. Aer Lingus, which was facing losses of £20m for this year, is now estimating that the figure will rise to £60m.
By the end of last week, Europe's three leading airlines - British Airways, Air France and Lufthansa - had lost more than $4 billion from their combined market value.
Virgin Atlantic, the private airline 49% owned by Singapore Airlines, is losing £1m a day from grounding its transatlantic fleet.
Share prices of Boeing and Airbus also buckled as investors became concerned about falling orders.
The scale of the crisis facing the industry has been underlined by Continental Airlines, the fifth largest carrier. Gordon Bethune, Continental's chairman and chief executive, said mounting losses could force most of America's leading airlines into bankruptcy.
Bethune said: "This patient is dying very quickly. We all are going to be bankrupt before the end of the year. There is not an airline that I know of that has the excess cash to handle this."
Analysts say long-haul travel, the most profitable element of BA's business, could fall by 50%. BA is already planning to return aircraft to leasing companies in an effort to cut debts of £6.4 billion. This figure dwarfs BA's market value, which has tumbled to £1.8bn. The company will also come under pressure to cut its dividend.
Company sources admitted it was planning to reduce passenger capacity, but would not say how many planes it intended to return to lessors. BA said: "It's too soon to be taking a definitive view, but it is something that the airline is looking at very closely."
Continental's grim analysis is supported by Chris Avery, aviation analyst at JP Morgan. He said: "It is highly likely that by Christmas at least two of the US majors will have declared chapter 11 bankruptcy."
General Electric, the American conglomerate with big aviation interests, has already issued a profit warning because it had insurance exposure. Airlines account for about 1% of America's economy.
BA is one of the most highly geared of the European carriers. It has already started to address its cost base, axing jobs and introducing a hiring freeze. Aviation experts say it will need to take more radical action, either grounding planes or or handing them back to lessors.
BA is not the only European carrier preparing to take such action. Aer Lingus, which was facing losses of £20m for this year, is now estimating that the figure will rise to £60m.
By the end of last week, Europe's three leading airlines - British Airways, Air France and Lufthansa - had lost more than $4 billion from their combined market value.
Virgin Atlantic, the private airline 49% owned by Singapore Airlines, is losing £1m a day from grounding its transatlantic fleet.
Share prices of Boeing and Airbus also buckled as investors became concerned about falling orders.
JUST minutes after the terrorist strike on New York last Tuesday, America's air-traffic controllers started to reroute 150 US-bound international flights. As a logistical exercise it was a triumph that tested the skills of the industry to the full.
But as the impact of the attacks on the World Trade Center began to sink in, the aviation industry woke up to the huge financial and psychological consequences. Analysts estimate that net losses for international scheduled and domestic American air traffic could exceed $10 billion (£6.8 billion) this year.
The atrocity has tipped an already fragile industry deeper into a financial crisis and could result in the collapse of several airlines.
Chris Avery at JP Morgan, the investment bank, says: "This will be the toughest test the industry has ever faced."
The first casualty came last Wednesday when Midway Airlines, a small East-Coast carrier, filed for bankruptcy protection and laid off 1,700 workers.
Standard & Poor's, the credit-rating agency, has put the long-term ratings of all American airlines on credit watch. There are also concerns that the two carriers involved in the hijackings - United and American - could face huge insurance claims, far above their cover, stretching their finances to breaking point.
Many Americans cancelled flight bookings after the attack. Analysts estimate that demand for domestic American air travel will fall by as much as 50% this year. Operators are trying to work out how many planes will have to be grounded.
The pain will be shared by Europe's biggest carrier, British Airways, and Virgin Atlantic, its smaller competitor.
Will Whitehorn of Virgin said: "There are going to be tough times ahead."
The North Atlantic market, one of the world's economic arteries, is crucial to Virgin's profitability, accounting for 55% of its £1.5 billion annual sales.
Its transatlantic fleet has been sitting on the Tarmac awaiting the green light to fly, and every day has cost £1m (although Virgin says this cost is covered by insurance).
Whitehorn says that business will be brisk for the immediate future, as the airline attempts to fly home a huge number of Americans. He says: "We normally receive 7,000 calls a day, but for the past three days it has been running at 25,000. There are a large number of people who want to return home."
He adds that Virgin Atlantic, 49% owned by Singapore Airlines, is sitting on about £200m and has enough cash reserves to see it through a tough winter season.
Shares in BA sank to a 10-year low last week, touching 165p. At one stage last week its market value was less than Ryanair, the low-cost operator.
BA's price has plunged from a high of 463p at the start of the year and the group is now valued at £1.8 billion. At its peak, three years ago, it was capitalised at £7 billion. Industry experts say that BA is vulnerable to an opportunistic bid.
Attempts by Rod Eddington, BA's chief executive, to clinch a merger with American Airlines look unlikely, and an "open skies" deal between the American and British governments - which needs to be agreed if a merger is to go ahead - is now likely to be given a lower political priority.
For BA, the timing of last week's events could not have come at a worse time. It is only just recovering from the foot-and-mouth epidemic, which deterred American tourists
from travelling to Britain.
BA's house broker, Merrill Lynch, has just slashed its forecast for the company this year from a profit of £150m to a loss of £65m. This is principally due to a sharp downturn in BA's core business-travel market.
Including aircraft leases, BA has net debt of £6.4 billion, which it must cut quickly. This could involve grounding planes or agreeing to pay a penalty and hand them back to the lessors.
But BA has been in this kind of situation before. Avery says: "It was the first to react to the global recession in 1991 and a lot of the management team are still there and working extremely hard on a capacity plan to meet the new industry conditions.
"Because it reacted promptly last time, it was the first carrier to recover. Don't push it down too hard, because you might be surprised by how much it bounces."
The American operators could also face insurance claims over lax security for domestic flights. Improved security arrangements will hit the airlines' revenue base and result in fewer flights.
Securicor, the British security group, has contracts at two of the airports were the hijacked planes took off. These are held by Argenbright, its American subsidiary, and it could now find itself at the centre of litigation.
But a Securicor spokesman insists that the company complied with the rules laid out by airline clients. "We are focused on working with the relevant authorities to investigate the matter thoroughly. But our initial analysis indicates that Argenbright complied with screening and search guidelines and met its legal and contractual commitments."
He adds: "Initial intelligence suggests that the weapons used by the hijackers were items cleared by the Federal Aviation Authority to be taken on to those planes, such as razors and penknives. These items could also be purchased in duty-free and gift shops."
But as the impact of the attacks on the World Trade Center began to sink in, the aviation industry woke up to the huge financial and psychological consequences. Analysts estimate that net losses for international scheduled and domestic American air traffic could exceed $10 billion (£6.8 billion) this year.
The atrocity has tipped an already fragile industry deeper into a financial crisis and could result in the collapse of several airlines.
Chris Avery at JP Morgan, the investment bank, says: "This will be the toughest test the industry has ever faced."
The first casualty came last Wednesday when Midway Airlines, a small East-Coast carrier, filed for bankruptcy protection and laid off 1,700 workers.
Standard & Poor's, the credit-rating agency, has put the long-term ratings of all American airlines on credit watch. There are also concerns that the two carriers involved in the hijackings - United and American - could face huge insurance claims, far above their cover, stretching their finances to breaking point.
Many Americans cancelled flight bookings after the attack. Analysts estimate that demand for domestic American air travel will fall by as much as 50% this year. Operators are trying to work out how many planes will have to be grounded.
The pain will be shared by Europe's biggest carrier, British Airways, and Virgin Atlantic, its smaller competitor.
Will Whitehorn of Virgin said: "There are going to be tough times ahead."
The North Atlantic market, one of the world's economic arteries, is crucial to Virgin's profitability, accounting for 55% of its £1.5 billion annual sales.
Its transatlantic fleet has been sitting on the Tarmac awaiting the green light to fly, and every day has cost £1m (although Virgin says this cost is covered by insurance).
Whitehorn says that business will be brisk for the immediate future, as the airline attempts to fly home a huge number of Americans. He says: "We normally receive 7,000 calls a day, but for the past three days it has been running at 25,000. There are a large number of people who want to return home."
He adds that Virgin Atlantic, 49% owned by Singapore Airlines, is sitting on about £200m and has enough cash reserves to see it through a tough winter season.
Shares in BA sank to a 10-year low last week, touching 165p. At one stage last week its market value was less than Ryanair, the low-cost operator.
BA's price has plunged from a high of 463p at the start of the year and the group is now valued at £1.8 billion. At its peak, three years ago, it was capitalised at £7 billion. Industry experts say that BA is vulnerable to an opportunistic bid.
Attempts by Rod Eddington, BA's chief executive, to clinch a merger with American Airlines look unlikely, and an "open skies" deal between the American and British governments - which needs to be agreed if a merger is to go ahead - is now likely to be given a lower political priority.
For BA, the timing of last week's events could not have come at a worse time. It is only just recovering from the foot-and-mouth epidemic, which deterred American tourists
from travelling to Britain.
BA's house broker, Merrill Lynch, has just slashed its forecast for the company this year from a profit of £150m to a loss of £65m. This is principally due to a sharp downturn in BA's core business-travel market.
Including aircraft leases, BA has net debt of £6.4 billion, which it must cut quickly. This could involve grounding planes or agreeing to pay a penalty and hand them back to the lessors.
But BA has been in this kind of situation before. Avery says: "It was the first to react to the global recession in 1991 and a lot of the management team are still there and working extremely hard on a capacity plan to meet the new industry conditions.
"Because it reacted promptly last time, it was the first carrier to recover. Don't push it down too hard, because you might be surprised by how much it bounces."
The American operators could also face insurance claims over lax security for domestic flights. Improved security arrangements will hit the airlines' revenue base and result in fewer flights.
Securicor, the British security group, has contracts at two of the airports were the hijacked planes took off. These are held by Argenbright, its American subsidiary, and it could now find itself at the centre of litigation.
But a Securicor spokesman insists that the company complied with the rules laid out by airline clients. "We are focused on working with the relevant authorities to investigate the matter thoroughly. But our initial analysis indicates that Argenbright complied with screening and search guidelines and met its legal and contractual commitments."
He adds: "Initial intelligence suggests that the weapons used by the hijackers were items cleared by the Federal Aviation Authority to be taken on to those planes, such as razors and penknives. These items could also be purchased in duty-free and gift shops."
Join Date: Jul 1998
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If Virgin and other UK based transatlantic operators take the initiatave and show the US that they have taken steps to secure the flight deck and cabin then maybe they will feel confident to travel again.I am surprised that the security on US internal flights do not match a picture with the boarding pass as they do in the UK.At least then they would have known who they were dealing with and maybe which organisation was behind this atrocity a bit sooner.As a final thoughtmaybe CCTV on the airbridges so the passengers could be monitored before boarding,anyone looking suspicous at this time could be investigated.