Airline industry turbulence rocked Texas

Monday, December 27th 2004, 1:10 pm
By: News On 6

UNDATED (AP) _ This year brought more evidence of how the US airline industry has turned upside down.

The once-mighty hub-and-spoke carriers continue to lose money while low-cost operators remain profitable and drive more change.

The three major Texas-based carriers reflected the trend perfectly.

Fort Worth-based American Airlines is the nation's largest carrier. It and Houston-based Continental Airlines both hoped to return to profitability in 2004. Instead, they saw the high cost of jet fuel result in another money-losing year.

While fuel is adding to airline costs, constant fare sales are pinching carriers' revenue.

Analysts expect all the old-line, so-called legacy carriers such as American and Continental to lose money again next year.

At the other end of the spectrum is Dallas-based Southwest Airlines, which goes about its business by making profits. Its hot streak now extends to over a decade.

For 30 years, Southwest was an underdog known for pioneering low fares that have lifted it far above the turbulence rocking most rivals.

Southwest's market capitalization is nearly four times more than that of American-parent AMR, Continental and Delta combined. It's also the only US carrier whose debt is still rated investment grade by Moody's Investors Service.

In December, Southwest made a dramatic move by increasing its stronghold at Chicago's Midway Airport. Its $117-million bid won assets of bankrupt ATA Airlines, including six gates at the airport.