Return to Transcripts main page

CNN Sunday Morning

Many Airlines in Financial Trouble

Aired December 01, 2002 - 09:34   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KRIS OSBORN, CNN ANCHOR: United isn't the only airline that's encountered some troubled financial skies. CNN's Kathleen Koch reports.
(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): The world's second largest airline, United, teetering on the brink of bankruptcy. U.S. Airways trying to come back after it filed Chapter 11 in August. Other carriers struggling too. The Air Transport Association is predicting $9 billion in losses those year. Airlines lost $8 billion in 2001.

DAVID STEMPLER, AIRLINE PASSENGERS ASSOCIATION: Clearly the big airlines are in terrible trouble. There's no question about that. And one of the big problems are these unfunded mandates that have come down from the federal government, which has imposed all kinds of security costs on the airlines that they really can't pass on to passengers, so they're suffering for it.

KOCH: But some travel experts say tough times for the airlines mean low, discounted fares for the flying public.

CON HITCHCOCK, ORBITZ: Airlines are just trying to fill up those empty seats. They'd love to raise prices, if they could, but the public is not going along with them thus far. Thus, you're seeing things like lower business fares to get business travelers back.

KOCH: And travel deals over normally blacked out holiday periods. Still, some argue the bankruptcy of a giant like United would hurt customer service and eventually mean reduced flights to small and mid-sized communities. But most agree the airline itself would eventually emerge stronger.

RAY NEIDL, AIRLINE ANALYST: The airline would still be running. Airlines take a long time to die as is the case of Eastern and Pan Am. The thing is, if they went into a bankruptcy and got their cost structure down and restructured the company the way it should be, they could come out of it a very tough competitor.

(END VIDEOTAPE)

KOCH: United Airlines flight attendants late yesterday did agree to millions in pay cuts, but business experts say it will take more than that, like wage concessions from the airline's mechanics, to keep the carrier out of bankruptcy -- Kris. OSBORN: You know, Kathleen, isn't part of the difficulty for an airline like United, the existence, the emergence, if you will, of so many smaller, low budget airlines, such as JetBlue, where they're not hiring union employees, things of that nature?

KOCH: That's tough, and also the big carriers, American, United, for years they really relied on those business travelers who they could charge quite high fares to. And since 9/11, business travelers have found other options. Many of them not traveling at all. And so those were their cash cows, and they have to get along without them now, and it's very tough.

OSBORN: How is the TSA doing in terms of its funding? A while back, when it was having trouble about this impending deadline, it said, hey, we need money in order to make things happen.

KOCH: The TSA still hasn't gotten all the funding that it wanted, but it believes that most of the airlines are still going to be able to meet this -- or most of the airports, this bag screening deadline, by the end of the year, most of them with the exception of about 35 or 40 airports will be ready, but they're still lobbying for more money, hoping to get more next year.

OSBORN: Absolutely. Kathleen Koch, live at Reagan National Airport, on a very busy travel day. Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired December 1, 2002 - 09:34   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KRIS OSBORN, CNN ANCHOR: United isn't the only airline that's encountered some troubled financial skies. CNN's Kathleen Koch reports.
(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): The world's second largest airline, United, teetering on the brink of bankruptcy. U.S. Airways trying to come back after it filed Chapter 11 in August. Other carriers struggling too. The Air Transport Association is predicting $9 billion in losses those year. Airlines lost $8 billion in 2001.

DAVID STEMPLER, AIRLINE PASSENGERS ASSOCIATION: Clearly the big airlines are in terrible trouble. There's no question about that. And one of the big problems are these unfunded mandates that have come down from the federal government, which has imposed all kinds of security costs on the airlines that they really can't pass on to passengers, so they're suffering for it.

KOCH: But some travel experts say tough times for the airlines mean low, discounted fares for the flying public.

CON HITCHCOCK, ORBITZ: Airlines are just trying to fill up those empty seats. They'd love to raise prices, if they could, but the public is not going along with them thus far. Thus, you're seeing things like lower business fares to get business travelers back.

KOCH: And travel deals over normally blacked out holiday periods. Still, some argue the bankruptcy of a giant like United would hurt customer service and eventually mean reduced flights to small and mid-sized communities. But most agree the airline itself would eventually emerge stronger.

RAY NEIDL, AIRLINE ANALYST: The airline would still be running. Airlines take a long time to die as is the case of Eastern and Pan Am. The thing is, if they went into a bankruptcy and got their cost structure down and restructured the company the way it should be, they could come out of it a very tough competitor.

(END VIDEOTAPE)

KOCH: United Airlines flight attendants late yesterday did agree to millions in pay cuts, but business experts say it will take more than that, like wage concessions from the airline's mechanics, to keep the carrier out of bankruptcy -- Kris. OSBORN: You know, Kathleen, isn't part of the difficulty for an airline like United, the existence, the emergence, if you will, of so many smaller, low budget airlines, such as JetBlue, where they're not hiring union employees, things of that nature?

KOCH: That's tough, and also the big carriers, American, United, for years they really relied on those business travelers who they could charge quite high fares to. And since 9/11, business travelers have found other options. Many of them not traveling at all. And so those were their cash cows, and they have to get along without them now, and it's very tough.

OSBORN: How is the TSA doing in terms of its funding? A while back, when it was having trouble about this impending deadline, it said, hey, we need money in order to make things happen.

KOCH: The TSA still hasn't gotten all the funding that it wanted, but it believes that most of the airlines are still going to be able to meet this -- or most of the airports, this bag screening deadline, by the end of the year, most of them with the exception of about 35 or 40 airports will be ready, but they're still lobbying for more money, hoping to get more next year.

OSBORN: Absolutely. Kathleen Koch, live at Reagan National Airport, on a very busy travel day. Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com