Possible Trouble Awaits Airline Industry

While dynamo entrepreneur Richard Branson, chairman of Virgin Group, wants to open outer space to travel with his new model SpaceShipTwo spacecraft, the airline industry is reporting 2007 results that are less than inspiring.

Delta Air Lines reported a loss of $70 million for the fourth quarter 2007 up from a reported loss in excess of $1 billion in 2006. United Airlines posted a $403-million profit for 2007, but it is the first full year of profits since 2000. US Airways reported a net loss in the fourth quarter of $79 million, but posted a $427 profit for the full year.

Airline annual reports, including profitable American Airlines and Southwest Airlines, detail tough problems ahead, including soaring fuel costs. Other key issues in 2007 will be airline consolidation and the impact on the traveling public. Also to be expected are clashes between unions and managements, air traffic delays and questions about capacity and demand.

To top it off, Congress has stalled for months on action of the Federal Aviation Administrations (FAA) budget authorization, including funding for long overdue air traffic control system enhancements. The smart money may place bets on more delays, cancellations and public inconvenience. The biggest issue may be increased costs including fuel surcharges and tax add-ons. (GD)