Go Back  Airline Pilot Central Forums > Airline Pilot Forums > Major
Fuel Costs Could Devistate Airlines >

Fuel Costs Could Devistate Airlines

Notices
Major Legacy, National, and LCC

Fuel Costs Could Devistate Airlines

Old 06-24-2008, 02:59 AM
  #1  
Gets ALL Days Off
Thread Starter
 
UnlimitedAkro's Avatar
 
Joined APC: Mar 2007
Position: Sit down comedian.
Posts: 958
Default Fuel Costs Could Devistate Airlines

http://money.cnn.com/2008/06/23/news...ines/index.htm

Fuel costs could 'devastate' airlines

Rising fuel costs could drive major air carriers out of business and hurt economy, says report.

NEW YORK (CNNMoney.com) -- The skyrocketing price of fuel could "devastate" the airline industry and hurt the economy, according to a report from the Business Travel Coalition released Monday.
Pressured by rising fuel costs, major airlines could collapse as early as this year, the coalition said. The failure of just one airline could disrupt travel for 200,000 to 300,000 daily passengers and cause between 30,000 and 75,000 immediate job losses, said the coalition.

The failure of more than one airline could result in 100,000 job losses, said the report, particularly in such hubs as Atlanta for Delta Air Lines (DAL, Fortune 500), Chicago for UAL Corp.'s (UAL) United Airlines and Continental Airlines' (CAL, Fortune 500) Houston.

"Already-depleted cash reserves are dwindling fast, and unless the fuel crisis lessens, airlines face not the now-familiar protracted restructuring in bankruptcy, but outright and immediate extinction," said the report.
Business travel would be disrupted, as would the airborne supply chain for goods like pharmaceuticals, electronics and auto parts.
Rising fuel costs hit airlines hard. Fuel expenses are expected to total $61.2 billion this year, compared to $41.2 billion in 2007, according to the Air Transport Association.

Some major airlines, such as Northwest Airlines (NWA, Fortune 500), United Airlines, Delta and U.S. Airways (LCC, Fortune 500), continue to operate despite filing for bankruptcy in the last several years. But the credit crisis would make it harder for a bankrupt airline to keep operating while trying to restructure its business, according to the coalition.
The lack of bankruptcy financing is part of the reason why smaller airlines like Aloha, ATA, Champion, Eos and Skybus recently stopped operating, said the report.

Analysts who cover the industry disagreed that a major carrier would crumble this year, because the airlines still have enough cash to survive into 2009.

"I think it's more likely that any large airline bankruptcies would occur next year," said Philip Baggaley of Standard & Poor's, who has assigned his lowest ratings to U.S. Airways, AirTran Airways (AAI) and JetBlue Airways (JBLU). "At least at current fuel prices, most of them have enough liquidity to get through several more quarters. But it could get rather more uncomfortable by 2009. Oil prices are the largest variable."

Robert Mann Jr., an industry consultant, said the airlines have enough cash to ward off collapse for this year, and that capacity cuts should help them survive.

"The cuts in flying are designed to cut cash loss and that's what I hope happens," said Mann.

Raymond Neidl of Calyon Securities agreed that the airlines have enough cash to avoid disaster in the near future, though he expects that the number of carriers will shrink through consolidation.

"Nobody's going into bankruptcy this year," said Neidl. "Airlines die slow, and they always seem to come up with the cash to keep going."

Delta plans to acquire Northwest Airlines, though the merger is yet to be finalized.
UnlimitedAkro is offline  
Old 06-24-2008, 04:29 AM
  #2  
Retired
 
DYNASTY HVY's Avatar
 
Joined APC: Feb 2008
Position: whale wrangler
Posts: 3,527
Default

Airlines die slow, and they always seem to come up with the cash to keep going."
Yep ,employee paycuts and pensions.
DYNASTY HVY is offline  
Old 06-24-2008, 04:54 AM
  #3  
Gets ALL Days Off
Thread Starter
 
UnlimitedAkro's Avatar
 
Joined APC: Mar 2007
Position: Sit down comedian.
Posts: 958
Default

I wish there was a way to edit the title of the thread.

At least I didnt write fueil or fwuel or phuel.
UnlimitedAkro is offline  
Old 06-24-2008, 04:58 AM
  #4  
Retired
 
DYNASTY HVY's Avatar
 
Joined APC: Feb 2008
Position: whale wrangler
Posts: 3,527
Default

Thats ok akro i figured it outlol
DYNASTY HVY is offline  
Related Topics
Thread
Thread Starter
Forum
Replies
Last Post
vagabond
Major
20
05-03-2008 12:03 PM
Lbell911
Major
14
04-13-2008 07:00 AM
RockBottom
Major
3
02-24-2006 02:05 PM
RockBottom
Major
1
12-08-2005 06:50 AM
SWAjet
Major
0
02-26-2005 11:49 AM

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Thread Tools
Search this Thread
Your Privacy Choices