MORE GOOD NEWS FROM CONTINENTAL

My February 22nd post was titled “Great News From Continental”. The news was that this airline, unlike any other U.S. airline, has ordered from Boeing some new 777 planes, an order which adds to previous 787 order (of course, at this point no one knows when those planes will enter service) and some 24 new 737-900s that some of them have already been delivered to CO.

All those orders have positioned CO as the youngest fleet airline in the U.S. for the coming years, and this means also the airline with the most economically efficient fleet.

But right after that came some news that were not so good: CO has started talks with United Airlines, focusing on a possible merger amid the one of Delta and Northwest. Unlike the DL-NWA merger, which made much sense, a possible CO-UA merger did not do the same. Basically it was a union between a successful, efficient airline (CO), as shown by the new 777 order, and a severely ailing behemoth airline (UA).

It turns out that I wasn’t the only one thinking that way. As this CO news release from April 27th shows, CO’s senior executives have also thought that a merger with UA is not such a good idea, to put it mildly.

Thus, the good news are that CO stays independent, and hopefully more successful than its American contemporaries.

THE AIRLINE CRISIS IS HERE

My last entry to this blog was posted April 11th, less than two weeks ago. Its headline read: “On The Verge of Major Crisis”. Today I would like to set the record straight: We are not on the verge of a major crisis - we are well inside a major crisis.

The global airline industry is facing the greatest crisis in its history. While I am writing this, crude oil price have reached $120 a barrel; next week it may land at $130 or $140. These last few days all major U.S. airlines have reported their first quarter performance, and they are all in the red. Delta Airlines, for example, reported a $6.4 billion loss!

There are two main questions that need to be answered in the short and medium ranges:
1. At what point will there be a decline in demand for air travel, as tourists and business travelers alike begin to cancel at least some of their travels?
2. What the future holds for Boeing’s and Airbus’ huge backlog? Are all of those theoretical airplanes really going to make it to the real world?

The most recent sign that we are already in a severe crisis is this web site. It belongs to Continental Airlines, the only one of the six major U.S. airlines that can be viewed as successful. If CO have reached a stage of establishing a web site with the purpose of working on “the hearts and minds” of its employees and others and preparing them for a coming merger, there isn’t much left to say.

ON THE VERGE OF MAJOR CRISIS

Just look at what happened in the U.S. airline industry for the past ten days or so:

* Aloha Airlines goes bankrupt and stop flying.
* ATA goes bankrupt and stop flying.
* Skybus goes bankrupt and stop flying.
* Frontier Airlines goes bankrupt (but keep flying for the moment).
* Boeing announce another delay in the 787 project, resulting in a longer period of long-haul planes shortage.
* American Airlines grounds its MD-80 fleet for maintenance reasons, stranding more than a quarter of a million passengers.

Did someone say CRISIS?