The second quarter charges are in for 3 of the big 6. Leading the pack is United Air Lines with $2.7 billion dollars worth of accounting charges. United is America’s second largest airline, just trailing behind AMR Corporation’s American Airlines. The airline is also at a 52 week low in shares. I highly doubt that they’ll be recovering anytime soon.
In second place, it’s US Airways Group with $622 million dollars. Once again, high fuel prices are the cause of this. On their website, US Airways Group CEO W. Doug Parker states that to break even on flights, the airline would have to charge $600 to $700, on average, for a ticket. Yet they cannot do that since there are too many seats available on routes, and I don’t blame him, since low-cost carriers would be able to sweep up the extra passengers. His answer is to add more fees and cut capacity, like most airlines are doing.
Finally, we have Continental Airlines who said that they will post a pre-tax charge of $58 million dollars. The airline stated that this expense was due to capacity reductions. The carrier said it may post an after-tax gain. Continental is probably a legacy carrier that knows what they are doing financially. With Larry Kellner at the helm, who holds a degree in accounting, I’m sure that Continental should be in tip-top shape. Continental Airlines was also recently named as the “Best Domestic airline”, “Best Airline for Customer Service”, and, “Best Airline for Flights to Mexico.” All of these awards were awarded by Executive Travel Magazine.
