Despite 'Gas Tax Cut', Airlines See Tumbling Traffic, Outsource US Jobs

This wasn't how it was supposed to be? Collapsing crude oil prices - according to the mainstream (Fed-spoonfed) narrative means lower costs for business and 'massive' tax cuts for consumers enabling disposable income to surge. But, American Airlines just announced a 3.4 percentage point plunge in its load factor (ability to fill its planes) in December and while Southwest saw traffic rise, its load factor also fell as passenger revenue per seat tumbled 4-5%. So no extra spending... and now United reports it is looking to outsource 2,000 jobs in a cost-cutting effort (which seems odd given the total collapse of the fuel cost overhead?). Oh well, just keep repeating - crashing oil prices are unambiguously good.

 

As IBD reports, Consumer disposable income is not being spent on flights...

American said December traffic in revenue passenger miles dipped 0.4% compared with the prior year. Available seat miles, or capacity, gained 3.7%.

 

Load factor, which measures an airline's ability to fill its planes, hit 80.4%, down 3.4 percentage points from December 2013.

 

For Q4, American expects passenger revenue per available seat mile (PRASM), a measure of unit revenue, to be flat to down 2%. That suggests weak unit revenue in December.

 

...

 

Southwest's traffic rose 2.8% in December while capacity increased 2.9%. Load factor reached 82.7%, down 0.1 percentage point from December '13.

 

Southwest estimates that its PRASM for December fell in the range of 4% to 5%. But for Q4, PRASM is estimated to have increased 1% to 2% compared with last year.

And then Fortune reports, it appears the utter carnage in the price of fuel is not enough to cut the costs for United...

United Airlines is assessing whether to outsource jobs at airports around the country in a cost-cutting effort that could affect some 2,000 workers.

 

The Chicago-based carrier, an arm of United Continental, informed employees Monday that jobs up for review included baggage handlers and gate and customer service agents at 28 airports that are not hubs, ranging from Atlanta to Anchorage. It has yet to make any decisions.

 

The potential outsourcing marks another step the carrier could take to help meet the goal it laid out in 2013 to cut costs by $2 billion annually. United said in an investor update Friday that it expects 2014 unit costs to increase up to 1.4% year-on-year, excluding fuel and other special charges.

 

The outsourcing review comes on top of plans announced in July to outsource more than 630 jobs.

 

“We need to ensure that our costs are competitive,” company spokesman Luke Punzenberger said.

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But apart from that, crashing oil prices are awesome... oh wait no they're not anymore...