The American Airline Industry Essay -- Business Management Studies Air

The American Airline laborThe Airline Industry is a highly competitive industry with companiesoperating in domesticated and/or international markets. Many airlines argonstilled owned by their single countries and have treaties betweencountries to allow airlines to land there. The industry has beentaking a relatively shaky course as costs are emanation and profits havebeen decreasing. This was further escalate with the recentterrorist attacks on US soil, which acquit to higher costs as the needfor more credentials arose. Recent financial statements of major airlinesshowing major losses excogitate the problems that the industry is having.Yet amidst the storm, some regional airlines such as putting surface Blue Airlineshave managed to focus on specific markets and maintained or increasedtheir profits. It is no doubt that Porters 5 forces of contestare at play in this industry. These forces are the little terror ofSubstitutes, curse of new-fashioned Entrants, Competitive Riva lry, BargainingPower of Buyers and Bargaining Power of Suppliers.Threat of SubstitutesThe airline industry has been plagued by rising costs resulting in inadequate profits. The recession adversely affected the industry during thefirst half of 2001. This was intensified by the folk musicember 11thattacks, when two airlines were crashed into the Twin Towers in red-hotYork City by terrorists killing everyone on board and demolishing thebuildings. This lead to an immediate reduction in air travel ascustomers did not feel safe about flying and an increase in the social function ofother forms of transportation. Amtrak, a railway company, reported anincrease in passenger volume in the days following the attacks. Thoughthis has leveled off as things returned to normal, rail travel is asubstitute for air travel that depart be utilized by customers if theyare looking for cheaper travel and if they are looking for a leisuretrip that would not be excessively time consuming. Automobiles ar e also a formof travel that is a substitute for air travel. This is especially thecase when a family is traveling as the costs are minimized andschedules coordinated on the travelers timetable.Threat of New EntrantsHistorically, entry into the market has been relatively easy forairline companies. When the economy was booming, concourse traveled morefor leisure and companies used this opportunity to enter th... ...aken from Hoovers Online) receiptss (in Millions) crime syndicate 2002 Sept 2001US Airways 1903.0 2493.0American 4494.0 4816.0Southwest 1391.2 1335.1Net Income (in Millions) Sept 2002 Sept 2001US Airways (248.0) (24.0)American (924.0) (414.0)Southwest 74.9 151.0Total Assets (in Millions) Sept 2002 Sept 2001US Airways 7705.0 9564.0American 31502.0 31840.0Southwest 8954.3 7994.9Total Debt (in Millions) Sept 2002 Sept 2001US Airways 10808.0 10106.0American 28991.0 25609.0Southwest 4631.6 4045.3EPS (in dollars) Sept 2002 Sept 2001US Airways (3.64) (.36)American (5.93) (2.68)Southwest .09 .19Revenue Passenger Miles Oct 2002 Oct 2001US Airways 2,965,753 2,802,967American 3,048,000 2,851,000Southwest 3,258,017 2,590,610Load Factor (%) Oct 2002 Oct 2001US Airways 66.9 61.7American 63.2 57.8Southwest 56.8 53.4