If oil somehow returned to $100, would furloughs still be in the offing? I know there has been a general slow down in the economy, but it seems that oil is at the heart of this slowdown. If oil weren't the problem it is today, would hiring for attrition still be in full swing? That's the impression I have. I'm interested to know if that's what others feel. Thanks.

 

I kinda agree with you, I think things would be status quo. However there were way too many seats chasing to few passengers domesticly, and needed to be adjusted for carriers to stay healthy. We, though the Wal-Marts of the world managed to take the chinese off their bicycles. Now the chinese are putting us on bicycles. Just a thought!


md80zdriver

 

Compared to the year 2000, how does today's capacity compare? I ask because it seems to me that capacity cuts are just a reactionary move to oil at $140. Given that cost, I can understand why airlines are making these cost cutting choices, but are capacity cuts really the right move? What about service competition as opposed to price competition?

I guess this is the thing I've never understood about the airlines. Each move they make is about tomorrow and not about the next few years. Where is the strategic thinking? Was there too much capacity in 2007 when airlines were hiring? I guess not or they wouldn't have staffed the flights. In fact, 2007 was a great year for the airlines. Even today, is there really too much capacity? It seems to me that every seat is usually filled.

If history is any guide, we all know the cuts will be too deep and the inevitable rehires will be too large. I'm just thinking out loud though.

 

That's because the majority of the airlines don't have a hope of making it a year, let alone the next few years.

 

I tend to disagree with this statement, but it's hard to argue with it today. I've turned quite bearish in the short term, but I really do think oil will retreat to $100 or less in a few months. If that happens, hopefully the guys about to get furloughed won't. I don't even have a job, but I don't want to see the industry shattered. I've had two interviews cancelled in the last five weeks, but I keep telling myself it will get better! If I say it enough, I might believe it.

 

Well, with all due your respect I would like to politely disagree and expose my point of view. I think the biggest problem of America right now is thinking that oil prices are going to go down and things will get better. They'll get better, but first they are going to get worst. There's no way oil prices can go down that easely, first because oil prices are up because economics 101 (offer and demand) and only about up to 15% of the price is because speculation, (all that cash poured into commodities). Yes, if speculation would come to a halt, (let say the congress passes the gas pump act or whatever they want to call it) it would help a little bit with the price, but not much. Also, good and bad news, the Federal reserve is done with "artificially" driving interest rates down, that will help with the value of the dollar, thus helping to purchase oil at a lower nominal dollar value, but it'll take some time. Also, as mentioned above, there was a tendency of economic slowdown not related to oil prices entirely, why? well we all know this one. America is in debt. More than ever. At the consumer and corporate level. Artificial money poured into real estate after the bear market of 2000-2001 of the famous dot com, drove real estate prices up and lenders were extremely liberal lending money, more than what average joe could afford. Off course, economy is about much more than those basic facts, but I think we all get the big picture.
My point is, America is going to learn a big lesson, and it's going to hurt. We all need to commit to find new ways of not depending on foreign oil (or anything else) and reduce our personal debt significantely so we can go back and fuel the "american production machine".
I don't need to say how all these things affect air travel, we all know. I also think that coming back to pre 1978 airline regulation is impossible, but the feds could do better with passing anti-predatory prices laws..... i.e. Skybus deals...... we have some serious anti-trust laws in these countries which really work well overall, but we also are in desperate need of "fair regulatory laws".

I'm not trying to be a smart ass, just my point of view. Would like to hear more points of views off course.

 

If Viagra weren’t around, would eighty year old men still get erections? Oil is what it is, hypothetical’s do no good to offer a real solution to the problem. Sorry to all in the wake of our slowing economy - Good luck and God bless all.

 

My sentiment is the airlines will cut the smallest amount they can and still try to outlast the opposition. They are no smarter than that. Oil is just forcing the hand a bit. To the original post, I'm sure there would be furloughs regardless due to competition.

On a side note, if the gubment really cared about speculators, they'd have done something already. All it is doing right now is crushing the economy, and they know that. I heard on the radio Ford is down 28 percent in sales from last year (can't remember if it was just for June or the entire year, like it makes a difference). I wonder if this won't end up as a depression if this gets any worse.

 

The "gubment" really cares about speculators, but saddly, they care about them more than they care about real solutions. As I posted before, speculators only have driven the price by about 15% (tops) for oil. And yes, there is a bill on the way for speculators. Specifically, the "London bypass". The American "average Joe" has more power than what we think. We are average joes. Let's help ourselves. The government doesn't drive a nation, the people do though..........

 

If Israel attacks Iran like they seem to be preparing for then some annalists estimate that oil could hit $400 a barrel before Christmas.

SkyHigh