Term Paper on "Failure of US Airways"

Term Paper 4 pages (1442 words) Sources: 1+

[EXCERPT] . . . .

U.S. Airways: Business Analysis and Decomposition

The objectives of this study are first to explore exactly what has culminated in terms of the financial strategy of U.S. Airways over the past few years. Trending in the airline industry certainly is one of a bevy of factors propelling U.S. Airways. The Bankruptcy was filed as will be revealed in this study. In light of the dynamic changes that are indicated in the industries strategy and financial facts the study of this case is certain to yield information worth noting.

The research as to what has happened and is occurring was interesting and did yield quiet a bit of information that is pertinent to the study.

Various and Sundry Factors Affecting U.S. Airways:

The factors that are affecting U.S. Airways and in fact affecting the entire airlines business are the following:

Tighter security since 911 which results in:

More invasive screening

Longer waits to board the planes

Higher fuel costs for the airlines.

Worker refusing lowered wages.

International Upheaval

Environmental Factors

More standards for the airlines to meet.

Competition is on the increase in the airlines industry due to globalization.

Higher insurance rates for the airlines.

In general, the airline's costs are climbing higher while their income is falling lower due to the expenses that have increased since 911 in terms of operating expenses. Speaking generally of those individuals who are considered regular customers with the airlines, the more invasive screening, the missing of personals that were in cargo luggage as well as the overall change of environment in taking an airline flight has customers opting for other sources of travel accommodation

II. Evidence Supporting These Reasons for Failing Airlines Businesses:

In a news report dated November 11, 2004 it was reported that:

11/11/2004 Delta to cut 6,000+ jobs

Delta will cut between 6000 and 6,900 jobs during the next 18 months and those remaining will have to take a 10% pay cut and loose some employee benefits. The airline will issue up to 75 million shares of common stock, most of which will go to pay employees as part of a new incentive program. It will use an exception in the NYSE shareholder approval policy to issue the shares. Of the total number of employees to be laid off, 1,500 to 1,800 will be administrative staff, between 1,600 and 2,000 are technical employees and between 2,900 and 3,100 will be customer-service employees. The layoffs will start January 1 and continue for 18 months. I guess we can expect even less customer service from Delta in the future.

Further reported in a news report on October 26, 2004, was that:

UA to send 650 reservation jobs to India United plans to send about 650 reservation jobs to India, saying it will help make the airline more responsive to customers seeking competitive fares. In other words you want a cheap fare then deal with someone in India who has no understanding of the airline and pay $5 for the privilege. The carrier is closing a call center in Bloomington, in."

It has also been recently reported that overweight people may have to pay more for flights because they cost more per pound to fly as is stated in the following report excerpt from October 20, 2004:

Americans' expanding waistlines are adding to the airlines' already rising fuel bills, according to a story in the Atlanta Journal Constitution. A report by physicians at the Centers for Disease Control and Prevention says the average American gained 10 pounds during the 1990s. The extra weight translated to 350 million extra gallons of fuel used by airlines. The cost? About $275 million in 2000 alone, the report says -- and that was when jet fuel cost less than half today's price. The higher fuel consumption also resulted in an extra 3.8 million tons of carbon dioxide and smaller amounts of other pollutants, it adds. The report, published in this month's American Journal of Preventive Medicine, focuses on overlooked economic and health consequences of obesity, said Dr. Andrew Dannenberg, who studies how the man-made world affects health.

That however. is not the report containing the most information about overweight individuals flying. It seems that overloading may have been a common airline practice until something occurred to change that as evidenced in the following report:

The Federal Aviation Administration announced… READ MORE

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