Banu Ozkaya
Ben Harris
James Babb

 Most Direct Competitors
 Competitor Financial Situations
 Competitor Strategies
 Charts reflection industry
 Industry Trend
 Future of the Airline Companies

 American Airlines
 Delta Airlines
 United Airlines
 Airtran Airways
 Southwest Airlines

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Largest US Airline
Based in Forth Worth, Texas
Not in Chapter 11 Bankruptcy
Serves 150 destinations worldwide
International carrier operating 699 aircraft
Purchased TWA in April 2001
American Airlines’ CASM is 3% higher than Continental
Biggest Concern: Competing on price with reorganized airlines

 ASM:
 RASM:
 CASM:
 BE Load Factor
176.13 Billion Miles
9.43¢
10.50¢
 Net Income: $(861,000,000.00)
 Load Factor: 78.6%
85.5%

 Lower operating costs in order to compete with restructured airlines and low-cost carriers
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Improve Hub-and-Spoke system to more efficiently serve larger markets
Utilize it’s American Eagle brand as a low-cost alternative carrier to compete with low fare airlines.
Source: American Airlines 2005 10-K

Strengths Weakness
•
Strong brand name
•
Efforts to improve performance
• One of the largest airlines in the
US
•
Strong alliances in the industry
•
Continued losses
•
Substantial indebtedness
• High dependence on travel agents for ticket sale
Opportunities
•
Growth in transcontinental market
•
Reduction in costs through collaborative efforts
•
Recovery in passenger traffic
Threats
•
Intense competition from low fare players
•
Increasing fuel prices
•
Regulations governing the airline industry
Source: http://web105.epnet.com

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Based in Atlanta, Georgia
Currently in Chapter 11 Bankruptcy
International carrier operating 649 aircraft
Serves 149 Cities Worldwide
Delta Airlines’ CASM is 14% higher than Continental
Biggest Concern: Competition from low-cost carriers and recently reorganized airlines
Source: Delta Airlines 2005 10-K

 ASM:
 RASM:
 CASM:
 BE Load Factor
156.79 Billion Miles
10.33¢
11.60¢
 Net Income: $(3,836,000,000)
 Load Factor: 76.5%
86.9%
Source: Delta Airlines 2005 10-K

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Strengthen their Domestic Hub and Spoke
Network
Increase International Presence in Europe and Asia
Merge SONG (Delta’s low fare airline) into
Delta and convert their planes to the classsystem
Delta is seeking the higher end customers and adding better entertainment choices and more first-class seats.
Source: Delta Airlines 2005 10-k

Strengths
•
Global reach through network and alliances
• Strong market position
•
Hub airports
Weaknesses
•
Significant overlap with lowcost airlines
• Delta’s low cost carrier Song
•
Lack of competitive strengths
V’s AMR
Opportunities
•
Cut in pilot pay would drastically decrease costs
•
Engage in further alliances
•
Orbitz Inc.
Threats
•
Low cost competition
• Delta’s Regional Jet advantage likely to slip
•
General industry risks
Source: http://web105.epnet.com

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Based in Chicago, Illinois
Currently in Chapter 11 Bankruptcy
International carrier operating 460 aircraft
Serves 120 destinations worldwide
United Airlines’ CASM is 4% higher than Continental
Biggest Concern: Competition from low-cost carriers, Higher fuel costs,
Terrorist attacks.

 ASM:
 RASM:
 CASM:
 BE Load Factor
140.3 Billion Miles
9.20¢
10.59¢
 Net Income: $(182,290,000)
 Load Factor: 81.4%
82.8%
Source: United Airlines 2005 10-K

 Appeal to high-end customers through the introduction of enhanced first-class service.
 Appeal to low-fare flyers through
TED, United’s low cost carrier
 Utilize the popular United
Mileage-Plus frequent flyer program to attract and retain high value customers

Strengths
•
Global Network
•
Improved operational performance
• United’s membership of Star
Alliance
Weakness
•
Chapter 11 bankruptcy
•
Continuous operating losses
•
Increased taxi time in 2004
Opportunities Threats
• United’s expansion in Central
America, the Caribbean and
Mexico
•
Growing traffic in Asia
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September 11 law suits
•
Oil price rise
•
Uncertainty in demand
Source: http://web105.epnet.com

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Based in Orlando, Florida. Main Hub in Atlanta, GA
International carrier operating 105 aircraft
Serves 47 US destinations as well as flights to Freeport, Bahamas
Airtran Airways CASM is 9% lower than Continental
Airtran is one of only a handful US carriers that has managed to remain profitable

 ASM:
 RASM:
 CASM:
15.36 billion miles
9.09¢
9.35¢
 Net Income: $1,722,000
 Load Factor: 73.5%
 BE Load Factor 73.4%
Source Airtran Airways 2005 10-K

 Low Cost
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Targets “value oriented” business and leisure travelers
 Low-Cost, Self-service ticketing to lower operating expenses
Source: Airtran Holdings 2005 10-K

Strengths
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Strong domestic presence
 Operates America’s youngest all-Boeing fleet
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Report profits when the competitors can not
Weaknesses
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High costs
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No international flight
Opportunities Threats
 Increased usage of regional jets
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Improving tourism market in
US
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Engage in further alliances
 Increasing competition
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Rising fuel costs
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Rising geopolitical tensions

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Based in Dallas, Texas
Domestic carrier operating 445 aircraft
Serves 61 US destinations
Southwest Airlines CASM is the lowest in the competitive group.
Southwest Airlines RASM was the by-far the highest in the competitive group.
Southwest had the highest Net Profit of all
US Domestic carriers for 2005.
Source: Southwest Airlines 2005 10-K filing

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ASM:
RASM:
CASM:
85.17 billion miles
12.09¢
8.09¢
Net Income: $548,000,000
Load Factor:
BE Load Factor
70.7%
55.5%*
Highest Revenue per Available Seat Mile from
Competitive Group
Lowest Cost per Available Seat Mile from
Competitive Group
Highest Profit from Competitive Group
2005 BE factor unavailable. 55.5% from 2001.
Source: Southwest Airlines 2005 10-K filing

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Short-Haul
Point-to-Point (Rather than traditional Hub-to-Hub)
Low Fare
Low Operating Cost
Services smaller, secondary airports
Single aircraft type allows for lower maintenance costs
Source: Southwest Airlines 2005 10-K filing

Strengths
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Market leadership
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Low cost business model
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Strong financial performance
Weaknesses
•
New services
•
Code sharing with ATA Airlines
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Positive outlook for the US airline industry
Opportunities
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Poor short-term liquidity situation
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No established alliances
•
Declining passenger revenue yields
Source: http://web105.epnet.com
Threats
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Increasing fuel costs
•
Uncertainty in demand
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Increasing competition

Strengths Weaknesses
•Strong industry position
•Strategic alliances
•Strong operating performance
•Advantageous location of hubs
•Relatively low growth and profitability
•Highly leveraged
Opportunities
•Cost-saving agreement with employees
•New international destinations
•Membership of Sky team alliance
•Fleet expansion
Threats
•Oil price rise
•Uncertainty in demand
•Poor outlook for US airline industry
•Weak US tourism industry
Source: http://web105.epnet.com

American
Airlines
Delta
Airlines
United
Airlines
Airtran Southwest
Airlines
Continental
ASM (billion) 176.13
RASM ( ¢ ) 9.43¢
CASM ( ¢ )
10.50¢
Net Income
(million
$)
$(861)
Load Factor
(%)
78.6%
BE Load
Factor
(%)
85.5%
156.79
10.33¢
11.60¢
140.3
9.20¢
10.59¢
15.36
9.09¢
9.35¢
85.17
12.09¢
8.09¢
$(3,836) $(182.29) $1.722
$548
89.65
10.46¢
10.22¢
$(68)
76.5% 81.4% 73.5% 70.7% 79.5%
86.9% 82.8% 73.4% 55.5% *

200,000,000
180,000,000
160,000,000
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
American
Delta
Continental
Southw est
Airtran
2003
Available Seat Miles
2004
Year
2005
Airtran
American
Continental
Delta
Southw est

6
4
2
0
14
12
10
8
Southwest
Delta
Continental
Airtran
American
2003
Revenue per Available Seat Mile
2004 2005

4.00
2.00
0.00
14.00
12.00
10.00
8.00
Delta
Am erican
Continental
Southw est
Airtran
6.00
2003
Cost per Available Seat Mile
2004 2005

$1,000,000,000
$0
-$1,000,000,000
Southwest
Airtran
Continental
Delta
American
-$2,000,000,000
-$3,000,000,000
-$4,000,000,000
-$5,000,000,000
-$6,000,000,000
Net Profit

85%
80%
75%
Continental
Delta
Am erican
Airtran
70%
Southw est
65%
60%
2003
Passenger Load Factor
2004 2005

 Brand loyalty is decreasing
 Trend  low-fare service

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References
Continental Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com
American Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com
United Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com
Delta Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com
Airtran Airways. (2004). Company Profile. Retrieved from http://www.datamonitor.com
Southwest Airlines . (2004). Company Profile. Retrieved from http://www.datamonitor.com