ucla transportation symposium lake arrowhead, ca

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UCLA Transportation Symposium Lake Arrowhead, CA

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Page 1: UCLA Transportation Symposium Lake Arrowhead, CA

UCLA Transportation SymposiumLake Arrowhead, CA

Page 2: UCLA Transportation Symposium Lake Arrowhead, CA

State of Industry – 40% of the industry capacityis in or heading towards bankruptcy

S&P rating is the Corporate credit rating as of July 31, 2004; Capacity based on Q2 ‘04

Share ofIndustry In

S&P Rating Capacity Bankruptcy?

Southwest Airlines A 8.6% No

Alaska Airlines BB- 2.6% No

JetBlue Airways Corp. BB- 2.1% No

Northwest Airlines Corp. B 10.4% No

Continental Airlines B 9.9% No

AirTran Holdings Inc. B- 1.3% No

America West Holding Corp. B- 3.5% No

AMR Corp. B- 20.2% No

Delta Air Lines Inc. CCC 15.2% Likely

US Airways Group Inc. CCC 6.2% Yes

ATA Holdings Corp. CCC 2.4% Likely

UAL Corp. D 16.6% Yes

Frontier Airlines Inc. N/A 1.0% No

Page 3: UCLA Transportation Symposium Lake Arrowhead, CA

Industry Recap Post 9/11

Airlines in Turmoil:AMR to Reduce Pilot Force by 20%

UAL Will Lay Off 1,500 WorkersAs Part of Cost-Cutting

• 140,000 Employees have been furloughed

• 800 Aircraft have been parked

Page 4: UCLA Transportation Symposium Lake Arrowhead, CA

Source: Merrill Lynch - August 30, 2004. Data for major airlines only, excluding government compensation

$ (

billi

ons)

-$6.2 Billion

-$7.7 Billion

-$5.4 Billion

-$3.3 Billion

-8

-6

-4

-2

0

2

2001 2002 2003 2004 forecast

Industry Net Losses

Page 5: UCLA Transportation Symposium Lake Arrowhead, CA

7%8%

10%

14%

16%

18% 19% 18% 19%19%

21%

23%24%

26%

40%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2006*

Lo

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arr

iers

' Ma

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Source: U.S. DOT DB1A database. LCC’s include: AirTran, Frontier, JetBlue and Southwest.Majors includes: Alaska, American, America West, Continental, Delta, Northwest, United and US Airways.* Merrill Lynch Research forecast

Low Cost Carriers’ Share of Passengers

Page 6: UCLA Transportation Symposium Lake Arrowhead, CA

And how do we surviven when -And how do we surviven when -

Page 7: UCLA Transportation Symposium Lake Arrowhead, CA

??

Page 8: UCLA Transportation Symposium Lake Arrowhead, CA

It’s all about It’s all about having an having an edge -edge -

A point of A point of differentiationdifferentiation

Page 9: UCLA Transportation Symposium Lake Arrowhead, CA

Airport of the Future

Page 10: UCLA Transportation Symposium Lake Arrowhead, CA

Alaska Operations InitiativesJuneau, Alaska

Page 11: UCLA Transportation Symposium Lake Arrowhead, CA

37

70 70

111120

138 140

172

0

30

60

90

120

150

180

Mixed FleetSeats

Page 12: UCLA Transportation Symposium Lake Arrowhead, CA

Air CargoAir CargoPost 9/11Post 9/11

Page 13: UCLA Transportation Symposium Lake Arrowhead, CA

Clawing for CustomersClawing for Customers Loss of walk-up customers.Loss of walk-up customers. Changes in security measures.Changes in security measures. Irresponsible pricing.Irresponsible pricing. Shift to Ground Transportation.Shift to Ground Transportation. C0ntrol Cost. C0ntrol Cost.

Page 14: UCLA Transportation Symposium Lake Arrowhead, CA

737-200 Combi Replacement

Page 15: UCLA Transportation Symposium Lake Arrowhead, CA

737-400 Combi Configuration

Cargo Door 70 Passenger

Seats

Fixed Bulkheads

4 Cargo Igloos

Moveable BallastStorage

30% more cargo capacity15-20% more passengers

Page 16: UCLA Transportation Symposium Lake Arrowhead, CA

Maintaining your competitive edge.

19991999 20002000 20012001 20032003 20042004

Page 17: UCLA Transportation Symposium Lake Arrowhead, CA