Now that Oil is Dropping...
 

Do you think hiring will start to pick up again? Oil today closed at $78 dollars a barrel and some people are speculating it could drop down to $50-$60 a barrel

Well, there's this pesky little thing called the stock market and the global financial crisis that may have a little something to do with it. But get your apps in, I'm sure they'll be calling you soon...

oil in the short to medium time will follow current trends of the other stock indexes.
I believe it could be in the 40s sometime in the first quarter next year. There is have been a huge loss of money in the last year 8.3 trillion dollars lost since record highs were set just a little over a year ago.

There is the fear factor that is playing hell on the market right now, and investors are starting to think there is no money left to spend in markets and futures, and they have not find out when to stop selling. this will continue the slide of all markets and oil as well. There are weekly inventory reports every wed. morning, and they continue to show inventories rising, and demand falling at the same time. Futures contract will be getting ready to expire around the end of the third week of the month. This leads me to believe that gasoline prices will start picking up thier speed from records highs set this summer.

While the globe appears to setting in place for a recession if not already there, oil and all the other markerts will remained low and under vauled. It would not surprise me one bit if by the end of second quarter, there will be traders/inverstors complaining that oil is under valued. Might spark a short ralley. Opec is saying oil is under vauled now, but with only thier 40 percent of world production, they as always have history has shown lost control of the market.

Even with the emengency meeting of OPEC on NOV 18, anaylyst are expecting 500,000 to 1 million barrel cut, and that is going to start being priced into the market. At the conclusion of their meeting, oil prices are not expected at this time to stop retreat.

I am not going to be surprised to see oil anywhere from 48.75 to 62 something in the next 6 to 8 months. I think we are going to get used to seeing oil in the mid 70's more than it being anywhere else.

Reeves

Get that app in. You're first in line after the 3000 or so pilots that are currently furloughed.

Tell you what guys, the only reason that oil is dropping is the state of the financial markets which pushes demand for oil down. And when the markets are doing bad, then people will travel less and so demand for air travel goes waaaay down. So airlines stop hiring as a result. What you want to happen is a strong market with low oil prices. If you are patient enough, that will happen but be prepared to wait a few years. Just because oil prices drop to 5 dollars a barrell does not mean airlines will go on a hiring spree........

oil prices...
 

I'd expect that oil is going to continue to drop in price as the drop in demand is transmitted back to the distributors, wholesalers and suppliers. Travel worldwide can be expected to drop off markedly in the next few months.
The overall damage to our domestic economy and it's implications for the rest of the world is going to be difficult to measure. For one thing, the market sell-off, credit crunch and banking crisis hasn't bottomed out yet. In the short-term there is going to business failures, personal bankruptcies and foreclosures galore in the coming months. Ironically, this will also be the time when many people and businesses will get rich too. If you are in a good equity position with good credit, businesses and individuals will be capitalize upon it. Weaker companies and individuals will suffer greatly. It is a sad fact, but there is going to be alot of personal carnage resulting from the greed of certain individuals charged with operating our banking and mortgage industries.
As for the airlines, the current crisis will expose the weaker airlines and we may see more Ch. 11 and perhaps even a Ch. 7 or two. I certainly hope not, but if you think the airlines are over-capacity now? Wait until the next six-months rolls around and instead of battling high-fuel costs. Managers are going to be facing hideously loe load factors, and will have to respond by lowering fares. This will benefit those that can afford to travel, but in the long-run the airlines will suffer from a drop in business.
On the bright side, I think that the money supply is going to shrink as the credit crunch continues, and this will lead to the dollar making a comeback. We will have a recovery, but it's difficult to say how long it will be until things return to "normal".

Regards,

ex-Navy Rotorhead

Doesn't mean too much unless refining costs come back down. In Chicago today I saw gas for $4.10/gal. Keep building your time and put yourself in the best position to jump on a job when they start hiring again.

Absolutely not. The price of oil has little impact on whether or not your company sends you to that business meeting or if you decide to go see grandma this year.

Dang, $4.10!! that is price gauging. We are paying 2.79 in Dayton and Cincinnati.

The economy may still do enough damage to airline revenues to make up for any drop in fuel prices.

Also once the furlough/fleet reduction starts, it's hard to stop it.

Lower fuel prices might not change much anyway...the very fact that we now know that oil can shoot up to $150 in a matter of months or weeks will likely keep managers pretty conservative going forward.

In the short term no but in the long term I'd like to think so. What the airlines need to start doing is Hedging oil at intervals. Once in an area where they can operate in the black, CAL is already there, they need to lock that in and get ready to party.

So why not hedge now to keep from worrying about whether or not it will shoot up in a matter of weeks?

Because everyone is broke. No extra money to hedge fuel.

Nah airlines still have billions in cash reserves.

Well, with oil going down in price I hope that more hiring will commence. But like it was stated before, there are a lot of people out on furlough that will be fighting for all the available slots opening. I wish all that chose to come into this industry the best of luck and prosperity! Hopefully in the next fear years we will begin to see the crest of yet another boom in the airlines.

Just think happy thoughts and remember fondly the bygone golden era of ONE YEAR AGO.

news was reporting that airlines really have the potential to turn a profit come 2009 with fuel prices at their current levels. But, the mentioned that much of that was as a result of route cutting, and the overwhelmingly full load capacity. Honestly, just as easily as they could now "turn a profit" they could lose it all over again if oil prices spike once again. I don't know if I'd expect to see additional trimming just for the sake of doing so, but, I'd be hard pressed to expect a lot of growth right now....might not be the smartest business move, if there is growth, i'd much rather see it at the top, than at the bottom....

While I agree there is room for profits next year, I think there is considerable momentum in the cost trimming, rasing fares, and other balance increasing programs that will take time to slow and re-tool the thinking into growth.

I would doubt there is going to be much growth until mangement groups feel like they are down playing damage control with the balance sheets. There could also be some problems with airlines trying to re finance their debt for growth. I would guess right now some of the larger airlines are already too leveraged to the point they cannot breath.

Reeves