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Bankrkuptcies, Profits, Subsidies, expectations.

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[quote user="henry6"] So Sam and Blue Streak, another question arises.  If every venture is going to end at some point and that it will never make money in the long run, why do anything? [/quote] In part for the love of the game!  And in part because some investors in the airlines have realized a reasonable return on their investment.  The key to investing is to know when to fold them.  It is a long term proposition.  But not necessarily in one business or one industry.  Diversity is the key. I have been tracking the key financial results for the nation's major carriers for the last five years.  Clearly, this is not since the beginning of the industry or since de-regulation. However, the results are not as bad as the news media would have us believe. This is especially true if one backs out the losses incurred by American, which tried to row against the tide, i.e. it was not able to renegotiate its labor contracts whilst is major competitors were able to do so through bankruptcy, and the huge one time loss incurred by Delta as a result of its merger with Northwest. From FY07 through FY11 the major carriers had combined operating profits of $7.3 billion. However, because of restructuring charges, as well as the impact of the worst recession since the Great Depression, they had a combined loss (net income) of $486 million. The key number is operating profit. Net income usually includes non-cash items that can result in a loss over the short haul but do not threaten the financial viability of the entity. Of course, if a business does not turn the losses around, it will likely be toast.  In 2007 there were 23 carriers that were classified as major carriers, i.e. annual revenues in excess of $20 million. This year the number is 13.  And some analysts believe that American will eventually merge with U.S. Air.
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