14 billion during the third quarter of 2002 represents 95 percent of the industry's total losses. United lost $47 on every passenger that boarded one of its planes. The airline burned through an average $7 million of cash each day while rival American Airlines burned $4 million to $5 million per day. American Airlines planned to park 42 of its 800 aircraft in the desert in 2003, stating that doing so will not require it to cancel a single flight. Delta plans to idle many planes and lay off 8,000 employees. .
US Airways filed for bankruptcy in mid-2002. United finally succumbed to Chapter 11 bankruptcy in December 2002 after failing to negotiate necessary wage and salary decreases with its employees. This bad news may turn out to be good for the industry if market forces play out as some analysts expect. Initially, United's rivals, especially Northwest and American, may benefit by maneuvering to gain market share at United's expense. In the longer run, the re-emergence of a leaner, strengthened United with lower labor costs will put pressure on the other large carriers to cut their labor and operating costs. Unions in contract negotiations in these competing airlines may lower their wage expectations. As the largest airlines gain more control of their expenses, they should become more competitive with Southwest Airlines and other discount airlines such as JetBlue. Jet who? That's right, JetBlue. Let's discuss the startup airline that has gotten so much positive press during the past two years. .
One writer suggested five correctives that might make the U.S. airline industry more competitive: .
1. Limit Code Sharing: Code sharing just means that two airlines sell tickets on each other's flights. But in practice some airlines have extended their relationships to offering overlapping flights to certain cities. This appears to be a way of using their combined power to hurt competition. It is up to the federal government's Justice Department to stop approving these arrangements.
