Submitted by: Submitted by afitchgirl29
Views: 950
Words: 2618
Pages: 11
Category: Business and Industry
Date Submitted: 03/30/2010 11:57 AM
Airline Industry
Axia College
XXXXXXXXXXX
August 7, 2008
The airline business has been in existence for over 75 years. There have been many ups and downs in this particular industry’s wealth. While history has shown that over 140 airlines have declared Chapter 11; only a few airlines have truly come out of bankruptcy. At Present, the U.S. airline industry is facing a financial crisis and the outlook seems to be hopeless. The airline industry crisis was dramatically increased by the September 11th attacks; the high and escalating prices of gasoline, and the recent shortage that was caused by Hurricane Katrina in late August of 2005. Each of these was a world shaking event and in relation to the micro and macro economics presented a ripple effect that to this day is still being felt. These events sent shock waves through an industry that was already troubled. The severe impact it had on world travel perpetuated existing problems. Consolidation in airlines and markets, labor troubles and increasing gas prices are some of the most obvious issues impacting the industry.
The slowdown had already reduced business travel by 30%. Labor costs were increased by nearly 10%, gas prices were increasing, and business decisions needed serious attention. Only a few airlines were hands-on in restructuring their business plan to react to the failing economy. Those airline carriers who chose to do nothing will have or have to either file chapter 11 or are very close to doing so. The industry is at a major turning point. There could be major restructuring, bankruptcy, liquidations, or consolidations of major network carriers. Some airline carriers have done very well to just break even over the course of existence.
Southwest Airlines is the only major carrier that has shown a profit over the past four years which is in the same timeframe, that the other major carriers show a combined total loss in excess of 25 billion dollars. What helped keep Southwest...