=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/c/a/2008/04/23/BUS910A0EL= .DTL --------------------------------------------------------------------- Wednesday, April 23, 2008 (SF Chronicle) Airlines' woes get deeper and deeper/United has big quarterly loss - doesn'= t bode well for summer Dave Carpenter, Associated Press (04-23) 04:00 PDT Chicago -- Soaring fuel costs. Flights cut. Jobs lost. The parent company of United Airlines reported a worse-than-expected quarterly loss Tuesday, citing a string of problems that are hurting other carriers as well. And for travelers, a vacation season of jammed planes, delayed flights and higher fares looms in what's shaping up as the worst of times for airlines and their customers. "It's going to be a rough summer," said Terry Trippler, a travel expert = in Minneapolis. "It's going to be one where you've got to plan another day into your travel schedule" just to prepare for schedule chaos. Months of rising concerns about the consequences of higher fuel prices jumped to new levels of anxiety among investors on a gloomy combination of developments that sent UAL Corp. shares down a staggering 35 percent and battered other airline stocks. Not only did United post a $537 million first-quarter loss and announce cutbacks accordingly, crude oil surged near the once-unthinkable $120-a-barrel mark and Delta Air Lines Inc. chief executive Richard Anderson said domestic carriers would need to raise fares by 15 to 20 percent just to break even. With weaker demand because of the economy, cutbacks in corporate travel and likely "sticker shock" among consumers, it's not clear whether the airlines can accomplish such increases. Airlines have tried to raise ticket prices a dozen times across most of their route networks since the start of the year, but most attempts were rolled back after competitors refused to join in. Anderson said higher fares would likely diminish demand for air travel a= nd prompt carriers to further reduce their schedules. "We've got an industry that's in trouble," said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. "If oil prices stay anywhere near $100, $120 for the year ... we'll have a massive restructuring of the airline industry." It's time for passengers, too, to buckle up for a rough ride as the heavy travel season approaches. Planes will be fuller and ticket prices significantly higher than in past summers. Just how bad cancellations and delays will be is hard to predict. Airlines' recent cutbacks and the shutdowns of a handful of smaller carriers will remove some planes from the skies but won't solve congestion, and the threat of weather problems and labor strife is ever-present. Passengers have had a taste of the possible pandemonium already this year after massive flight cancellations by American Airlines and the Federal Aviation Administration stepping up its scrutiny of airplane inspections after years of more lenient enforcement. The good news, relatively speaking: Americans may already be steeled to these types of stressful conditions. "It's not like this has come out of the blue," Trippler said. "It's getting progressively worse every year. But most summer air travelers are experienced." So far, they're also determined to go regardless of ticket markups. Airlines have said their bookings still look strong, given the iffy economic situation. Arthur Salus, president of Duluth Travel outside Atlanta, said demand remains strong for both domestic and international travel. After all, sky-high gasoline costs don't look great by comparison, either. "People still have the money and they still want to travel," he said. "If someone pays $20, $30, $40 more for a ticket, that's not going to be a deterrent for them if they have to drive more than four to five hours." Eventually, though, both the airlines and analysts expect business to dr= op off as fares keep rising. For United, as with other carriers, higher fares are only part of the response to what it called an "extraordinarily difficult" operating environment that worsened Tuesday with crude prices rising another $1.89 to a record $119.37. The nation's second-largest airline said its revenue growth of nearly 8 percent was more than offset by a $618 million jump in fuel costs, which rose nearly 50 percent in a year. After reporting its biggest loss since emerging from bankruptcy in 2006, the airline said it will trim 2008 spending by $400 million, eliminate 1,100 jobs by the end of the year, cut domestic capacity 9 percent by the fourth quarter and ground 30 of its oldest and least-efficient aircraft. "The path to sustainable profitability requires us to fundamentally overhaul every facet of our business," said Glenn Tilton, United's chairman, president and chief executive. "The pressure of high energy prices and a weakening economy are a wake-up call that the pace of change must accelerate." Combining with another carrier could be next, especially in the wake of the proposed tie-up this month of Delta and Northwest Airlines Corp. While Tilton did not name Continental, United is known to be in talks with the carrier. Consolidation, the CEO said, is "one of the changes required to address the gap between where we stand today and profitability and sustainability." United follows American Airlines parent AMR Corp. and Continental Airlin= es Inc. into the red for the quarter because of fuel costs. Southwest is the only large carrier to have reported a profit so far. ----------------------= ------------------------------------------------ Copyright 2008 SF Chronicle <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".