=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2004/10= /27/BUG949GR2G1.DTL --------------------------------------------------------------------- Wednesday, October 27, 2004 (SF Chronicle) Rough ride for airlines David Lazarus Delta Air Lines' stock jumped more than 22 percent Tuesday after the struggling carrier secured $600 million in new financing and postponed a debt repayment of $135 million for two years. But don't think the company's turbulence is over. Not with oil at current sky-high levels. And don't think air travel will get any more comfortable or convenient. Not in this lifetime. "With these oil prices, it's like treading water with a weight around yo= ur neck," said Robert Mann, an airline-industry consultant. "You can do it for only so long." A bankruptcy filing by Delta, he and other analysts say, is still possib= le as so-called legacy carriers -- the fat, lumbering big guys of the skies -- grapple with runaway costs and an antiquated business model. United Airlines has already filed for bankruptcy protection. So has US Airways. They were joined Tuesday by the parent of ATA Airlines, the nation's 10th-largest carrier. Typically, airlines fill their pockets during the third quarter of the year, when people jet off for summer vacations. Last week, though, Delta reported a third-quarter loss of $646 million. The airline has lost almost $6 billion in the last four years. Delta is now negotiating about $1 billion in concessions from its pilots. Meanwhile, the parent of American Airlines posted a $214 million quarter= ly loss and said it will lay off as many as 1,100 workers. Northwest reported a loss of $46 million and Continental experienced a setback of $16 million. "The whole industry is treading water right now," Mann said. "Some will survive. Others will inevitably head to the bottom." The airline industry's problems are complex. Fierce competition keeps prices relatively low, while payroll and pension expenses keep fixed costs high. Most carriers were hammered by the plunge in passenger demand after the Sept. 11, 2001, terrorist attacks. Taxes and security costs are significant. And now oil is selling at record high levels. The Air Transport Association, an industry group, warned Congress in August -- when oil was trading around $45 per barrel -- that carriers were looking at about $6 billion more in fuel costs than they were last year. Oil was trading Tuesday north of $55 per barrel. "With their current cost structure, this industry cannot return to profitability with oil above $50 a barrel," said Ray Neidl, aviation analyst at Calyon Securities in New York. Most analysts believe major airlines will have no choice but to reinvent themselves, and they'll look to profitable upstarts like Southwest and JetBlue for guidance. That means few if any frills, reduced service to many domestic destinations (with no service at all for most smaller cities) and a travel experience far removed from the happier days of "the friendly skies." It also means airline workers will increasingly get by with less as their cash-strapped employers keep demanding wage and benefit concessions. "Some airlines will scale back service and others will disappear," Neidl said. "With oil this expensive, there's not much else you can expect." Fasten your seatbelts: I just experienced some air travel -- it was a ni= ce vacation, thanks -- so the issue of comfort aloft (or lack thereof) is very much on my mind. Industry experts speak of something called seat pitch when describing the amount of space passengers can call their own. Essentially, seat pitch is the amount of room between your seat and a similarly placed one in front of you. Coach passengers on most U.S. carriers now have seat pitch of about 31 inches, according to industry estimates. That compares with more than 80 inches for first-class passengers and about 50 inches for business class. Most coach travelers find 31 inches barely tolerable, and that in turn h= as kept the airlines from attempting to squeeze even more seats into the cabin. In Europe, seat pitch for some charter airlines slipped as low as 29 inches in recent years, prompting lawsuits from cramped, aching passengers. "There's a physiological limit to what you can do to people," commented airline consultant Mann. Yet seat pitch assumes that your seat will be positioned exactly the same as the one in front of you. It doesn't address what happens when you're upright with a book or laptop and the person in the forward row is fully reclined and trying to snooze. In that case, personal space all but vanishes. Mann said air travelers should simply resign themselves to such discomforts -- things won't be improving anytime soon. "Air travel will be like a glorified bus line," Mann predicted. "That's all most people are willing to pay for." Several years ago, American Airlines declared with much fanfare that it had heard its passengers' laments and was responding with a program called More Room Throughout Coach. It removed whole rows of seats to provide a few more precious inches of seat pitch. Last week, American said it is putting many of those seats back. "When we launched More Room Throughout Coach, healthy yields and robust business travel were the norm, and both conditions were essential to the success of More Room," Gerard Arpey, head of the airline's parent, AMR, said in a statement. "However, times have changed, and we must acknowledge that in today's lo= w- fare environment, having fewer seats on our aircraft has put us at a real revenue disadvantage compared to other airlines," he explained. Instead, the disadvantage is once again yours. David Lazarus' column appears Wednesdays, Fridays and Sundays. He also c= an be seen regularly on KTVU's "Mornings on 2." Send tips or feedback to dlazarus@xxxxxxxxxxxxxxxx -------------------------------------------------= --------------------- Copyright 2004 SF Chronicle