Porters Five Forces Us Airlines Industry Case Study Essay

The year 2011 was another(prenominal) dismal integrity for US airways in terms of fiscal performance. Despite an amplification in both passenger come and revenues for the year, pelf were guttle on 2010. In total, US airlines take a shited net profits of about $0.4 billion, representing a net shore of less than 1%. The dire financial state of the industry was underlined by AMR (the kindle of American air hoses) entering Chapter 11 failure in November 2011. This ended AMRs dominating record of being the only one of the major legacy airlines to have avoided bankruptcy. In 2005, Delta, United, Northwest, and US Airways had all fi led for bankruptcy protection. The early months of 2012 offered little hope of improvement. Airline revenues were up by 8.2% during the first nates of 2012 compared to the same quarter of 2011. However, as a result of higher cost, net income was down by 73.6% net margins had deteriorated from 3.2% to 5.2%. 1 The woes of the US airline industry during the 21st blow were typically attributed to the triple-whammy of the September 11, 2001 terrorist attacks, the high cost of crude oil, and the 2008 financial crash. Certainly, each of these was a powerful force in boosting costs and depressing demand. Yet, the financial problems of the US airline industry predated these events. Even during the generally roaring 1990s, the US airline industry had been just profitable. Outside the US, the state of the airline transmission line was little better. The IATA, the worldwide association of airlines, showed that the spheric airline industry had consistently failed to earn returns that covered its cost of capital