Air Transport World

The empires strike back: US legacy airlines' painful cost cuts could bear fruit in 2005.(Competition)(Industry Overview)

DON'T LOOK NOW, BUT US legacy airlines are in better shape to challenge their low-cost rivals than at any time since the start of the millennium.

Sure, that sounds farfetched. After all, in many respects the US legacy carriers entered 2005 in much the same way that they entered 2004: Awash in a sea of red ink, facing continued yield erosion and with a cost structure that is not sustainable in today's market. Without the bank of GE, half of them probably would be in liquidation by now.

Yet these same airlines also have made significant progress toward slicing through the unit cost advantage enjoyed by their low-fare antagonists. Assuming US Airways emerges from bankruptcy--a big IF it's true--its pilot pay rates will be about 4% lower than JetBlue and 20% below Southwest on similar equipment. …

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