[cfg83]

Hello -

I really don't believe in the economic model of US airlines. I wish I had the article, but here is the gist. Normal business models assume that a company can safely carry a 30% debt load. The US airline industry typically has twice that, i.e. a 60% debt load. The only airline that maintains the "normal" debt load is SouthWest airlines. Here is an (out of date) article that tangentially agrees :

United's future in limbo - 9 December, 2002
http://news.bbc.co.uk/1/hi/business/2547219.stm

Profit nightmare

More crucially, large commercial carriers, such as American, Delta, Continental as well as United, carry huge debt loads - as much as 70% of profits.

A lone passenger arrives for a flight at Chicago O'Hare International Airport on Wednesday.
United's home base is at Chicago O'Hare airport

An industry as volatile as the airline industry that is susceptible to such tragedies as 11 September should not be financed with that kind of debt load, says Professor Gritta.

In the case of United, with its employee owners, it has led to huge swings in profits, which leads bondholders and Wall Street to view the airline as a risky investment.

"What you get is a nightmare if revenues start to fall," Professor Gritta says.

Here is more on Southwest :

SouthWest Airlines Case Study: History and Analysis - Aug 4, 2005
http://www.echeat.com/essay.php?t=27535

... The reason for Southwest Airline's success is due to their low-cost model. The Southwest Airlines consists solely of Boeing 737s and offers only coach seats (there is no business or first class). Southwest Airlines also do not offer in-flight meals, only peanuts and other snacks. Southwest is simple and direct at the goal of their service; "a primarily short-haul airline that flies directly from city to city, with just one type of plane--the Boeing 737 - and the lowest costs". With a simple goal, Southwest has excised many of the "luxuries" that competitors have offered, such as luxury seats; this is made evident by their decision to enforce a rule for passengers who could not fit into the seats to purchase an additional seat. This rather unpopular move (whereas other airlines would have suggested a more luxury class seat) is simple in its purpose-get passengers from point A to point B. Services, such as in-flight meals and luxury seats, which have become standard to competitors, have been seen as unnecessary for an airline that provides a short-haul trip from city to city at the lowest cost. To have opted for a first class, business class, or any form of luxury class seat would have been excess baggage; most people would prefer to do without it if it meant for cheaper ticket price. ...

CarloSW2