Airline executives not seeing sunny skies yet

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CHICAGO, Illinois (Reuters) -- Although the dark clouds that have hung over the U.S. airline industry since the September 11 attacks are starting to fade, airline executives are not yet seeing sunny skies ahead.

Speaking at an analyst conference in New York Tuesday, several airline executives said they were still hesitant to predict that the industry, which spiraled into an unprecedented financial crisis after September 11, 2001, has turned a corner.

"Things have stabilized. Things are not getting worse," Southwest Airlines CEO Jim Parker said. "In my opinion, it is too early for me to stand here and tell you that things are getting better."

Southwest is the only major carrier that has been consistently profitable since the September 11 attacks devastated the industry. Its rivals have shed billions of dollars in losses as they seek to rev up demand for air travel, which is stuck at its lowest level in decades.

But the end of the Iraq war and abating fears about Severe Acute Respiratory Syndrome (SARS) are good signs for airlines. Many have said they are starting to see a pick-up in traffic, except on Pacific routes where SARS is still denting demand.

Carriers are hoping that the start of the summer travel season will help drive revenue higher. The injection of cash from a federal government aid package to help airlines offset security costs could also help limit airline losses. Relatively lower fuel prices also bode well for airlines, whose second largest expense behind labor is jet fuel.

Still, the leaders of other carriers expressed similar caution in painting a picture of their future business.

"We believe that any recovery in the next 12 to 18 months is going to be modest," US Airways Chief Executive David Siegel said. "We believe it's 2005 before we can hope for any kind of meaningful, measurable recovery."

US Airways emerged from bankruptcy at the end of March. UAL Corp.'s United Airlines has been operating under Chapter 11 protection from creditors since December after filing the largest bankruptcy in U.S. airline history.

Drumming up business

Most carriers have embarked on steep cost-cutting efforts to offset the slump in revenue.

Continental Airlines Chief Executive Gordon Bethune, speaking about his company's effort to slash costs by $500 million in 2004, said the goals are ambitious but achievable.

"We have to run this business to break even," he said. "Losses are not sustainable."

Banc of America analysts raised their rating on aerospace giant Boeing Co. to "buy" from "neutral" Tuesday, saying airlines were turning the corner and noting optimism among aircraft leasing companies as well as improving traffic in May. Boeing shares closed 3.4 percent higher.

Other analysts remain skeptical, however, including Jefferies & Co.'s Sam Pearlstein, who initiated Boeing coverage with a "hold" rating Tuesday.

Drumming up demand -- especially from the lucrative business travel segment -- still remains critical to recovery. Several carriers launched promotions last week aimed at enticing business travelers.

Last week, Delta CEO Leo Mullin said the industry faces another tough year.

"I think the very worst is over," Mullin said. "But I would not suggest anybody should presume that anything like a true uplift is on the way. There is still some time left."
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I love these guys:
[ QUOTE ]
"We believe that any recovery in the next 12 to 18 months is going to be modest," US Airways Chief Executive David Siegel said. "We believe it's 2005 before we can hope for any kind of meaningful, measurable recovery."

[/ QUOTE ]
[ QUOTE ]
Last week, Delta CEO Leo Mullin said the industry faces another tough year.

"I think the very worst is over," Mullin said. "But I would not suggest anybody should presume that anything like a true uplift is on the way. There is still some time left."

[/ QUOTE ]

Now, correct me if I'm wrong but didn't the first guy just gut pension plans to come out of bankruptcy only to turn around and buy 160 RJS? And the second guy, didn't he just secure pensions for top brass, start a new airline and order 100 RJs all while furloughing pilots?

Apparently there's been enough recovery to emerge from bankruptcy, buy a sh*tload of new aircraft and start a new airline but not enough to stop pilots from taking 25% pay cuts, and furloughs out the wazoo.

Someone explain this to me, please (rhetorical).
 
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