A casual observer of the struggling airline industry might think the nation's biggest carriers are either inept for losing billions of dollars with no end in sight, or pretty clever for managing to stay in business through it all.
Neither image would be fair.
The bulk of the industry, whose first-quarter results come out this week and next, has no easy way to turn around its fortunes, analysts say. Factors such as soaring fuel prices are beyond the airlines' control. The pressure to keep fares low has barely let up. And a legacy of inefficient operations will take a few more years - and contract negotiations - to fix.
At the same time, it isn't necessarily stellar management decisions that have kept the sickest airlines from going out of business; lenders, suppliers and regional airlines with vested interests in the carriers' survival have committed a steady stream of capital to keep the industry hobbling along.
While their strategic options are limited, executives haven't given up. They're still trying to squeeze labor costs, raise extra revenue wherever possible - such as selling in-flight snacks - and lobby the government to stop an increase in passenger security fees and ease their pension fund obligations. U.S. carriers have recently raised fares on four separate occasions, though the added revenue won't go nearly far enough, analysts said.
''The current crisis that is upon us is driven by fuel prices,'' said Dan Garton, executive vice president at Fort Worth, Texas-based AMR Corp., the parent company of American Airlines, the nation's largest airline.
That doesn't excuse the industry's other fundamental problems, such as a capacity glut and unprofitably low fares, but the persistently high price of fuel has masked significant progress on the cost-cutting front, Garton said.
Even so, ''we need to continue to lower our costs,'' Garton said. The company did just that last Thursday, cutting more than 500 employees at its Kansas City, Mo., maintenance base.
American has about $3 billion in cash, and that gives it ample breathing room even if fuel costs remain high, but industry officials and analysts cautioned that, without additional financing, other carriers could face liquidity crunches by the end of the year.
''Something's got to give,'' said John Heimlich, chief economist at the Air Transport Association, a Washington-based trade group. ''At the end of the day, I do believe in math. And there's just not enough revenue to go around for all of these players.''
Analysts expect all the nation's large airlines to report first-quarter losses, except for some regional carriers and low-fare airlines JetBlue Airways Corp. and Dallas-based Southwest Airlines, which is scheduled to be first to release its results Thursday. The industry's quarterly losses may exceed $2 billion, analysts say.
Since 2001, the U.S. airline industry has lost more than $30 billion due to an economic downturn, the effects of terrorism and the rapid growth of budget airlines, among other factors. If oil prices remain high, the industry could lose another $5 billion in 2005, analysts estimate. They won't rule out the possibility of further bankruptcies, and even a liquidation.
US Airways Group Inc. and UAL Corp., the parent of United Airlines, are the largest U.S. airlines in Chapter 11, and Delta Air Lines Inc. has warned it might also seek bankruptcy-court protection from creditors.
When asked about the company's ability to avoid Chapter 11, Delta CEO Gerald Grinstein said at a recent investor conference he believed the company would pull through. After a pause, he added: ''I hope.''
One reason Delta and others have been able to limp along while losing billions is that lenders, who in Delta's case include units of General Electric Co. and American Express Co., have extended huge amounts of credit, though not out of generosity.
''If General Electric felt it would be better off to pull the plug from one of several carriers that it's got lease agreements at, it would have done that a long time ago,'' said Daniel Kasper, who runs the transportation practice for the consulting firm LECG in Cambridge, Mass.
Instead GE, which also manufactures aircraft engines and leases planes, is lending more money in the hopes of nursing Delta - and other airlines, including US Airways and Independence Air - back to health so they can honor existing debts and, presumably, borrow more money and order more equipment.
In December 2004, Delta received more than $800 million from separate financing agreements with GE and American Express, bringing its total borrowings for the year to $2.4 billion and total outstanding debt to nearly $14 billion. In March the Atlanta-based carrier borrowed an additional $250 million from American Express.
US Airways recently secured much-needed financing from regional airline partners. Republic Airways Holding Inc. has agreed to invest $125 million after the Arlington, Va., carrier exits bankruptcy, while an affiliate of Air Wisconsin Airlines Corp. agreed to loan US Airways $125 million.
''Without a partner to feed, regional jets lose money,'' Goldman Sachs analyst Glenn Engel said in a report.
But aside from these forces propping up the ailing industry, there are an equal number of outside factors _ from high fuel costs to the boom in online travel booking _ working against the nation's largest carriers and for which there are no silver bullets.
Jet fuel prices average about $1.60 a gallon on the New York spot market, up 65 percent from a year ago. At the same time, domestic nonrefundable fares are 1 percent lower than last year and unrestricted fares are 33 percent lower, according to an analysis of 100 markets by New York-based consulting firm Harrell Associates.
Once-opaque ticket pricing is now transparent thanks to the proliferation of online travel sites, where bargain-hunting corporate and leisure travelers are helping to turn air travel into a commodity.
John Donnelly of Eclat Consulting in Reston, Va., said he does not expect any major carriers to liquidate. The more likely scenario, he said, is troubled carriers will continue ''limping along'' until fuel prices drop to more manageable levels, capacity tightens and demand rises enough so that fares can be raised to profitable levels.