Yes, to his credit Delta CEO Anderson did state that airfares do need to rise by 15 to 20% just to break even at current fuel price levels…so there is some frank talk among the puffery as well.

Finally, I might add that for Detroit Metro the future looks especially rosy. Northwest's largest hub will become Delta's second largest behind Atlanta…and additional international service could be at hand. Sao Paulo, Brazil with Buenos Aires another possibility.

Continental Will Stand Alone For Now
In a message to employees on April 27, Continental Airlines said it has decided not to merge with another carrier at this time.

Continental had reportedly been in advanced merger talks with United.

"In the current industry environment, the best course for Continental is to not merge with another airline at this time," said CEO Larry Kellner and President Jeff Smisek in the letter to employees. "The board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a standalone basis.

"We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today's environment."

High fuel costs have sent airlines reeling, which is reflected in first-quarter net losses that carriers have recently reported. Continental lost $80 million in the first quarter, but United's results were worse, as the airline lost $537 million, its biggest loss since emerging from bankruptcy in 2006.

United on April 28 issued a statement saying it would continue to seek a merger partner. With Continental out of the picture, it appears that United's most viable merger partner is US Airways.

In spite of Continental's announcement above, press reports emerged May 1 that Continental is in private talks with American and British Airways in regard to an alliance. That would require Continental to exit the SkyTeam alliance where announced merger partners Delta and Northwest live…and join the Oneworld alliance…where both American and British are members. None of the carriers will comment at this point.

US Airways And United In Advanced Merger Talks Source: copyright 2008, Travel Weekly
United and US Airways could announce within two weeks that they are merging, a person close to the negotiations told the Associated Press.

American loses $328 million, reveals plans to cut costs
A 45% increase in aircraft fuel costs helped push AMR Corp., the parent of American Airlines, to a $328 million loss in the first quarter of 2008.

American's fuel bill was $2.05 billion in the quarter, compared with $1.41 billion a year earlier.

American CEO Gerard Arpey said the airline is taking "numerous steps" to address the challenges of a weakened economy and record-high fuel prices, such as its recent hiring freeze for management and support staff. The airline also is making additional reductions to its 2008 capacity plan and is accelerating the replacement of its MD-80 fleet with more efficient Boeing 737-800s.

Also, AMR Corp. has agreed to sell American Beacon Advisors, its wholly owned asset-management subsidiary, to Lighthouse Holdings, for about $480 million. Lighthouse Holdings is owned by investment funds affiliated with Pharos Capital Group and TPG Capital. AMR will retain a 10% equity stake in the business.

Delta and Northwest combine to lose $10.5 billion in Q1
Delta and Northwest, which earlier this month reached an agreement to merge, both were hit with impairment charges in the first quarter, which resulted in astronomical losses for both airlines.

Delta reported a net loss of $6.4 billion for the first quarter of 2008, as the carrier was stuck with a $6.1 billion non-cash goodwill impairment charge from the decline in its market capitalization.

Meanwhile, Northwest Airlines’ results also included a goodwill impairment charge. The airline lost $4.1 billion in the first quarter, and $3.9 billion of that was the impairment charge.

When Delta emerged from bankruptcy a year ago, Delta said it recorded a $12 billion goodwill balance, a value that was predicated on the company’s market value at that time: $9.4 billion. A key assumption in that valuation was the price of fuel at $70 per barrel; crude oil recently traded at over $117 per barrel, noted Delta.

“Based on the difference between Delta’s book equity and an updated stand-alone valuation reflecting current fuel and economic assumptions, prepared in connection with Delta’s recently announced merger with Northwest, Delta recorded a non-cash goodwill impairment charge of $6.1 billion,” Delta said.

Another special item: $16 million in severance pay for Delta’s previously announced voluntary workforce reductions.

Excluding the special items, Delta lost $274 million in the first quarter. The airline lost $130 million in last year’s first quarter ($6 million if special and reorganization items are excluded).

Northwest reported a first-quarter net loss of $191 million, excluding special items. A year ago, Northwest lost $292 million in Q1 (excluding special items, the airline reported a net income of $73 million).

Continental loses $80M, Southwest earns $34M in Q1
Continental Airlines lost $80 million in the first quarter of 2008, as its fuel bill increased 53%, to $1.05 billion.

The airline reported a net profit of $22 million in the year-ago first quarter.

In response to record-high fuel prices, Continental plans to remove from service 14 older, less fuel-efficient Boeing 737-300 planes as leases expire on those aircraft from September 2008 to April 2009. These 14 737s are in addition to the 34 737-300s and 500s that Continental already planned to remove from service in 2008 and 2009.

Continental also expects to begin reducing regional jet capacity in the fall. The airline is attempting to renegotiate a more favorable deal with ExpressJet. Meanwhile, Canadair regional jets flown for Continental by Chautauqua are coming off lease.

Continental’s operating revenue for the first quarter rose 12.3%, to $3.57 billion.

Southwest squeezed out a profit of $34 million in the first quarter, compared with $93 million a year earlier.

Even with its industry-leading fuel-hedging program, Southwest’s jet fuel costs increased 20.7% in the first quarter. For 2008, the airline has more than 70% of its fuel consumption hedged at approximately $51 per barrel of crude oil.

Southwest is conducting a “rigorous review” of is flight schedule to eliminate nonproductive flying.

“Presently, we still plan to accept 29 new Boeing 737-700s in 2008, but we are reviewing our previous plan to retire 22 aircraft in light of this month's dramatic industry developments,” said Gary Kelly, Southwest’s CEO. “We have flexibility to adjust our fleet plans and are well-positioned to respond to a rapidly changing environment.”

Southwest’s operating revenue for the first quarter of 2008 increased 15.1%, to $2.53 billion.

Change fees on non-refundable international tickets have also increased. Some international non-refundable tickets cannot be changed, while some can be changed for a fee ranging from $150 to $250. The typical change fee on tickets to Europe is now $250 for both United and Lufthansa.

Due to the rising cost of fuel, US Airways is increasing the change fee on non-refundable fares by $50 per ticket. This increase is effective for all tickets issued on or after Tuesday, April 29, 2008.

The Transportation Department published a final rule updating its denied-boarding regulations. Among other things, the rule change on oversales will double the usual compensation and extend the coverage of the rule to smaller aircraft (those with 30 to 60 seats). Previously, operations using aircraft with fewer than 60 seats were exempt.