(Thu Jul 15th, 2010, by Steve Robinson)
US Airways has been displaying many signs of good tidings. US Airways stock has increased 79 percent this year, markedly outperforming its rivals.
The price of oil dropped almost 5 percent from the end of December to the end of June for the first time in seven years, helping US Airways in particular because it is the only major U.S. airline that has stopped hedging against higher jet fuel costs. US airways planes were very close to 83 percent full in May, a record for that month. It seems the oil contracts have as much effect on the profitability of airlines as any other factor. We witnessed the profitability of Southwest Airlines primarily due to their oil contracts a few years ago. Their reputation was even aided by this factor, as travelers feel they are a good airline because they were profitable when others were not.
Earlier this year Continental's CEO referred to US Airways as "the ugly girl" of the industry when speaking about Continental's proposed merger with United. At the time many industry experts seemed to agree and questioned US Airways' survival prospects if it could not find a merger partner.
US Airways has backed away from its previous aggressive pursuit of a merger and now claims that it is has a bright future on its own. It is amazing what some increased travel dollars will do for the mindset of the CEO's in charge of airlines. When business is difficult, airlines call our attention to the trends of the overall travel market. When the market improves, airlines take the credit for stronger profits.
According to industry insider, US Airways is not currently pursuing merger talks with American Airlines nor is it considering joining American's global marketing group, Oneworld. Currently US Airways is affiliated with rival Star Alliance, which includes United and Continental.
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