Every day, American Airlines gets up in the morning, looks in the mirror, thinks about the $3.3 million dollars it lost yesterday, brushes its teeth and gets ready to lose another $3.3 million. Fortune says the hemorrhaging began in January, and while red ink is no stranger to the airline industry, they’re running out of things to cut.
Fortune interviewed American Airlines’ CEO Gerard Arpey, who had this to say:
In this climate, Arpey won’t rule anything out. If Delta were able to complete its purchase of Northwest, American would be toppled from its perch as world’s largest carrier. And a combined United and Continental would be even larger. That would leave American in arguably the weakest position among the network carriers. But Arpey says the size of his company doesn’t matter as much as the strength of its assets. “We believe we will remain competitive irrespective of any consolidation that occurs,” he said. “The real challenge is being profitable.”
Later, as we were walking down the jet bridge, Arpey paused. “There is no business,” he said, “that can go on forever selling its product for less than the cost to produce it.”
Meanwhile, the Wall Street Journal notes that the airlines are finally starting to raise ticket prices along with the increased fees and surcharges. Travel blog Jaunted says:
Mergers would allow airlines to trim routes and, by reducing capacity, further raise prices, though carriers say that’s not the plan. (Riiiiight.) This is all good news to one company, though. Virgin America is keeping fares low by burning through investor cash…
Enjoy that while it lasts.
American Airlines loses $3.3 million a day[Fortune]
Airlines Finally Passing Higher Costs on to Passengers [Jaunted]