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Continental Airlines: The Competitive Arena

Continental Airlines: The Competitive Arena. Banu Ozkaya Ben Harris James Babb. Outline. Most Direct Competitors Competitor Financial Situations Competitor Strategies Charts reflection industry Industry Trend Future of the Airline Companies. Who are the Competition? (Top 5) .

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Continental Airlines: The Competitive Arena

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  1. Continental Airlines: The Competitive Arena Banu Ozkaya Ben Harris James Babb

  2. Outline • Most Direct Competitors • Competitor Financial Situations • Competitor Strategies • Charts reflection industry • Industry Trend • Future of the Airline Companies

  3. Who are the Competition?(Top 5) • American Airlines • Delta Airlines • United Airlines • Airtran Airways • Southwest Airlines

  4. American Airlines (2005) • Largest US Airline • Based in Forth Worth, Texas • Not in Chapter 11 Bankruptcy • Serves 150 destinations worldwide • International carrier operating 699 aircraft • Purchased TWA in April 2001 • American Airlines’ CASM is 3% higher than Continental • Biggest Concern: Competing on price with reorganized airlines

  5. American Airlines Financial Data (2005) • ASM: 176.13 Billion Miles • RASM: 9.43¢ • CASM: 10.50¢ • Net Income: $(861,000,000.00) • Load Factor: 78.6% • BE Load Factor 85.5%

  6. American AirlinesStrategy • Lower operating costs in order to compete with restructured airlines and low-cost carriers • Improve Hub-and-Spoke system to more efficiently serve larger markets • Utilize it’s American Eagle brand as a low-cost alternative carrier to compete with low fare airlines. Source: American Airlines 2005 10-K

  7. American AirlinesSWOT Source: http://web105.epnet.com

  8. Delta Airlines (2005) • Based in Atlanta, Georgia • Currently in Chapter 11 Bankruptcy • International carrier operating 649 aircraft • Serves 149 Cities Worldwide • Delta Airlines’ CASM is 14% higher than Continental • Biggest Concern: Competition from low-cost carriers and recently reorganized airlines Source: Delta Airlines 2005 10-K

  9. Delta Airlines Financial Data (2005) • ASM: 156.79 Billion Miles • RASM: 10.33¢ • CASM: 11.60¢ • Net Income: $(3,836,000,000) • Load Factor: 76.5% • BE Load Factor 86.9% Source: Delta Airlines 2005 10-K

  10. Delta AirlinesStrategy • Strengthen their Domestic Hub and Spoke Network • Increase International Presence in Europe and Asia • Merge SONG (Delta’s low fare airline) into Delta and convert their planes to the class-system • Delta is seeking the higher end customers and adding better entertainment choices and more first-class seats. Source: Delta Airlines 2005 10-k

  11. Delta AirlinesSWOT Source: http://web105.epnet.com

  12. United Airlines (2005) • Based in Chicago, Illinois • Currently in Chapter 11 Bankruptcy • International carrier operating 460 aircraft • Serves 120 destinations worldwide • United Airlines’ CASM is 4% higher than Continental • Biggest Concern: Competition from low-cost carriers, Higher fuel costs, Terrorist attacks.

  13. United Airlines Financial Data (2005) • ASM: 140.3 Billion Miles • RASM: 9.20¢ • CASM: 10.59¢ • Net Income: $(182,290,000) • Load Factor: 81.4% • BE Load Factor 82.8% Source: United Airlines 2005 10-K

  14. United AirlinesStrategy • Appeal to high-end customers through the introduction of enhanced first-class service. • Appeal to low-fare flyers through TED, United’s low cost carrier • Utilize the popular United Mileage-Plus frequent flyer program to attract and retain high value customers

  15. United AirlinesSWOT Source: http://web105.epnet.com

  16. Airtran Airways (2005) • Based in Orlando, Florida. Main Hub in Atlanta, GA • International carrier operating 105 aircraft • Serves 47 US destinations as well as flights to Freeport, Bahamas • Airtran Airways CASM is 9% lower than Continental • Airtran is one of only a handful US carriers that has managed to remain profitable

  17. Airtran Airways Financial Data (2005) • ASM: 15.36 billion miles • RASM: 9.09¢ • CASM: 9.35¢ • Net Income: $1,722,000 • Load Factor: 73.5% • BE Load Factor 73.4% Source Airtran Airways 2005 10-K

  18. Airtran Strategy • Low Cost • Targets “value oriented” business and leisure travelers • Low-Cost, Self-service ticketing to lower operating expenses Source: Airtran Holdings 2005 10-K

  19. Airtran SWOT

  20. Southwest Airlines (2005) • Based in Dallas, Texas • Domestic carrier operating 445 aircraft • Serves 61 US destinations • Southwest Airlines CASM is the lowest in the competitive group. • Southwest Airlines RASM was the by-far the highest in the competitive group. • Southwest had the highest Net Profit of all US Domestic carriers for 2005. Source: Southwest Airlines 2005 10-K filing

  21. Southwest Airlines Financial Data (2005) • ASM: 85.17 billion miles • RASM: 12.09¢ • CASM: 8.09¢ • Net Income: $548,000,000 • Load Factor: 70.7% • BE Load Factor 55.5%* • Highest Revenue per Available Seat Mile from Competitive Group • Lowest Cost per Available Seat Mile from Competitive Group • Highest Profit from Competitive Group 2005 BE factor unavailable. 55.5% from 2001. Source: Southwest Airlines 2005 10-K filing

  22. Southwest Strategy • Short-Haul • Point-to-Point (Rather than traditional Hub-to-Hub) • Low Fare • Low Operating Cost • Services smaller, secondary airports • Single aircraft type allows for lower maintenance costs Source: Southwest Airlines 2005 10-K filing

  23. Southwest AirlinesSWOT Source: http://web105.epnet.com

  24. Continental AirlinesSWOT Source: http://web105.epnet.com

  25. Comparison of Financial Situations of the Companies

  26. Industry Trend • Brand loyalty is decreasing • Trend  low-fare service

  27. Future of the Airline Companies ?

  28. References Continental Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com American Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com United Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com Delta Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com Airtran Airways. (2004). Company Profile. Retrieved from http://www.datamonitor.com Southwest Airlines. (2004). Company Profile. Retrieved from http://www.datamonitor.com

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