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Airlines in this recession

Old 12-05-2008, 08:00 AM
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Default Airlines in this recession

I have not been around all that long, but it seems airlines may be doing better now with the lower oil. Is it possible for airlines to do well and expand while the rest of the economy is bad?
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Old 12-05-2008, 08:09 AM
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Originally Posted by buffalopilot View Post
I have not been around all that long, but it seems airlines may be doing better now with the lower oil. Is it possible for airlines to do well and expand while the rest of the economy is bad?
Not a chance. The airline's cycles have traditionally been linked tightly to the greater economy. Lucrative business travellers vanish as business' cut expenses, and the average american is less willing to go on a pricey vacation or bop over to PHX for the weekend to chill out with cousin suzie.

Since 2001, we have seen the airlines suffer from issues other than the general economy: Terrorism, SARS, oil prices. But that does not exempt the airlines from economic malaise.

The lower oil prices will help reduce the damage that's all...assuming you didn't hedge at $145/bbl
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Old 12-05-2008, 08:10 AM
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To do so would completely destroy the significant improvements in yeilds they've made over the last year and maybe make it impossible to make money with $25 oil. Best case scenario is stasis; I think we'll see continued contraction at some airlines. Just my opinion.
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Old 12-05-2008, 07:19 PM
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Who the hell hedged $145bbl oil?
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Old 12-05-2008, 07:33 PM
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Originally Posted by Three Green View Post
Who the hell hedged $145bbl oil?
United
Continental not to far behind that
Delta at $120
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Old 12-05-2008, 09:04 PM
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Originally Posted by RiddleEagle18 View Post
United
Continental not to far behind that
Delta at $120
they arent 100% hedged at that price as far as i know. Also i though DAL had most of their hedges at 90? Still not great but better than CAL at 140
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Old 12-05-2008, 09:13 PM
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I think Cathay Pacific hedged some of their oil around $95 too, after all who knew the oil would drop this fast?
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Old 12-05-2008, 10:03 PM
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I think that during this recession you will see controlled expansion in certain companies. People who normally jet around first class might move down to coach and some of the normal coach passengers might head for LCC's only. IMHO the carriers you will see do well will be these LCC's that are not hedged and are able to fill some seats with the people who still need to travel.
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Old 12-06-2008, 12:52 AM
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Typically airlines are the first to feel the economic downturn.....the good news is when things start swinging back up airlines are the first to feel the upturn.

Lesson: If the airlines go so do the markets, if the markets go the airlines already went.
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Old 12-06-2008, 01:19 AM
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Hedging is a gamble just like any other investment. As a wiser man than myself once said, you gotta know when to hold em' and know when to fold em'. Hedges I mean.
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