Economics 101: US Carriers Have Sky High Breakeven Loadfactors - But Few Pax.
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Economics 101: US Carriers Have Sky High Breakeven Loadfactors - But Few Pax.
From today's ATW Online. This goes a long way towards explaining why US airlines are losing so much money.
Unless costs can be cut substantially, those carriers have no future.
Unless costs can be cut substantially, those carriers have no future.
Combination of rock-bottom fares and higher unit costs after the Sept. 11 terrorist attacks and resultant industry downsizing has pushed US airline breakeven load factors into the stratosphere, according to a report by Fitch Inc. "Across the board, it appears that breakeven load factors have jumped by 10 points or more since Sept. 11. Accordingly, even if airlines are able to restore load factors to pre-attack levels, they will continue to experience a significant cash drain," the report says. Fitch estimated that American Airlines' pre-Sept. 11 breakeven load factor was 74% but will be 85% in the fourth quarter. United's has risen from 84% to 96% while Delta's is now at 85%, up from 75%.
