Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Oct 04, 2004 Posts: 2500 Location: Ye Olde Englande
Posted: Tue Jun 14, 2005 10:58 am Post subject: Latest Airlines news and discussion.
Seeing as most people believe that the Airlines are (as Monte first said) the Canary in the Mineshaft, I thought it would be best to streamline all stories and discussions into a single thread.
Buyout firm Texas Pacific Group is considering a takeover of troubled airline carrier United Airlines, according to Crain's Chicago Business.
Chicago-based United is the world's second largest commercial airline behind Fort Worth's American Airlines. It operates major hubs in Chicago, Denver, Los Angeles, San Francisco and Washington, D.C. United uses three gates at Dallas/Fort Worth International Airport and has 19 daily domestic flights from the airport
_________________ "The age of excess is over. The age of entropy has begun"
Actually, what is happening in the airline industry makes no business sense at all.
1. New orders for airplanes are rebounding and Boeing and Airbus don't have the capacity to meet demands.
2. Airlines are suffering major debt/financial issues.
3. Number of passengers and air cargo are approaching record highs establish at the turn of the millenium.
4. Number of passengers per plane are increasing.
5. Number of empty seats per flight is decreasing.
If you ignore airline financial statements/health, you would think the airlines are entering a big boom in rising business. But, fuel costs are increasing, airfare prices are low, and revenues are low for the airlines.
If costs are rising, you need to increase ticket prices. If you cannot increase ticket prices, you better stop flying. Instead, we see increasing flights. They deserve to go bankrupt and should be shut down!
Joined: Apr 17, 2005 Posts: 2763 Location: Vancouver Island
Posted: Tue Jun 14, 2005 1:24 pm Post subject:
I believe a few things are taking place at the airlines.
They are bleeding cash intentionally to allow them to go broke and therefore get out of their pension and union requirements. This is similar to GM's moves I believe.
They are also engaging in a game of last man standing. They will attempt to do whatever is necessary to wipeout the smaller players so that consolidation can take place and then prices can be greatly increased. We saw the same happen in canada a few years back. _________________ shame on us, doomed from the start
god have mercy on our dirty little hearts
I believe a few things are taking place at the airlines.
They are bleeding cash intentionally to allow them to go broke and therefore get out of their pension and union requirements. This is similar to GM's moves I believe.
They are also engaging in a game of last man standing. They will attempt to do whatever is necessary to wipeout the smaller players so that consolidation can take place and then prices can be greatly increased. We saw the same happen in canada a few years back.
It happen to Canada? I guess I need to look into that.
The last man standing idea makes no sense in the US. US airlines are ruled by giant airlines, but it is the small carriers who are profitable and winning the airfare wars. The giants control airports, so able to restrict number of flights. The giants are bleeding so much money because they are killing each other and not because they are being killed by smaller airlines. Yes, smaller airlines are taking away market share and forcing them to match prices, but Giant airlines can launch small carrier airlines and don't have to lower prices where small carriers don't fly. But, we are seeing lower fares throughout. We are mainly seeing giants trying to kill themselves.
Joined: Feb 23, 2005 Posts: 242 Location: Kingston, ON, Canada
Posted: Tue Jun 14, 2005 4:53 pm Post subject:
In the Globe and Mail today there was an article that charted the price of WestJet and Air Canada fares since Jetsgo went out of business a month or so ago... they've already gone up. Not sure how relevant that is to the US situation, but just tossing it out there.
In the Globe and Mail today there was an article that charted the price of WestJet and Air Canada fares since Jetsgo went out of business a month or so ago... they've already gone up. Not sure how relevant that is to the US situation, but just tossing it out there.
It is very relevant for US.
Less competition will mean higher prices. We saw that before the advent of small airlines in US. But what we are seeing today seems to go beyond our normal correction. In the 1980's, US airlines deregulated and caused airlines to merge into a few large big airlines and prices started to climb and then small carriers battle with low prices and big airlines fought back. Small carriers were defeated. A few survived, but they only compete against large airlines and large airlines seldom compete against each other. They just simply match each others prices if competing. Today, we got an all out war. The target simply is not just small carriers, but large airlines are trying to kill each other, too. This fight between large airlines are causing the bleeding.
If costs are rising, you need to increase ticket prices. If you cannot increase ticket prices, you better stop flying. Instead, we see increasing flights. They deserve to go bankrupt and should be shut down!
I wonder how much of the poor economics realized by airlines is due to high overhead costs beyond the price of fuel? I believe that pilots, ground staff etc. are all in one or another union of some kind....certainly this must put pressure on salaries? As well I would not be surprised to see if landing fees and taxes have not increased at many airports just to handle increased security costs since 911. Might be interesting to look at how United is fairing since they got out of chapter 11.
Joined: Apr 05, 2005 Posts: 2604 Location: South of Atlanta
Posted: Tue Jun 14, 2005 11:23 pm Post subject:
United is NOT out of Chapter 11. They are still attempting to get relief from employees who have taken huge pay and benefit cuts. The PBGC has taken on the Pension obligations for most of thier employees because United has so badly underfunded it to start with. They are still in Chapter 11 and dragging the rest of the industry down with them. They lost over a Billion dollars last quarter. Thats Billion with a B.
This industry is in a race to the bottom and it's partly due to the high cost of fuel and the inability of the legacy carriers to react to a changing market place in a timely fashion.
This industry is in a race to the bottom and it's partly due to the high cost of fuel and the inability of the legacy carriers to react to a changing market place in a timely fashion.
That is a joke.
If fuel prices are the issue, then airfare ticket prices should go up and we see a drop in passengers.
Instead, the issue is giant airlines trying to kill each other by lowering prices below their costs.
Look at passenger per plane, they are literally all booked. You are looking at less than 5% tickets not sold. Even with 100% tickets sold, these airlines are not going to make money. They are only going to make money if they sell 100% tickets and also add lots of capacity!
That doesn't make business sense at all.
Either raise fares or downsize and they are doing neither, so of course, losing billions a year.
Joined: Apr 05, 2005 Posts: 2604 Location: South of Atlanta
Posted: Wed Jun 15, 2005 10:24 am Post subject:
Nth,
Its not a Joke, far from it. I do believe that management is using this environment to get what it wants. The cutthroat competition is due to the fact that the aircraft are NOT all booked. We are still at load factors in the 70-80% range on average. Until you see very high load factors in the 90-95% range than this insanity will continue. Everyone but the very low cost carriers is losing gobs of money with no end in sight. The fear of management is that if you raise prices you lose precious market share. I happen to agree with you by the way but its no joke. At some point you have to charge enough to cover the cost of producing your product or else you go out of business. Right now its a race to see who will be the last standing, then I predict a few big mergers and some stability until PO really takes hold. After that air travel will decline rapidly and be available only to the very wealthy.
It appears to me that after 16 years in this business the large legacy airlines are attempting to shed thier high labor costs and pensions through bankruptcy. Fuel is simply the catalyst that is helping them along this path.
At some point NO airline will be profitable if fuel prices continue to rise without commensurate increases in ticket prices. Even the LCC's are feeling the crunch. Southwest only made money because they are over 70% hedged at 28$/bbl through this year.
The industry is still consolidating from deregulation, it aint over yet.
Standard & Poors downgraded Northwest Airlines Corp.'s debt rating on Tuesday, saying the nation's fourth-largest carrier faces heavy losses and unions that aren't accepting cuts.
Standard & Poor's Ratings Services lowered Northwest's corporate debt two notches to CCC+, from B. Northwest's short-term rating was cut one notch to C from B-3.
_________________ "The age of excess is over. The age of entropy has begun"
federal bankruptcy judge has agreed to give United Airlines two more months to submit a reorganization plan without competition from outside investors, despite objections from some creditors.
Bankruptcy Judge Eugene Wedoff said the extension of exclusivity "would improve rather than detract from the potential for a successful reorganization" of the nation's No. 2 airline, which has been in Chapter 11 bankruptcy for 21/2 years
_________________ "The age of excess is over. The age of entropy has begun"
I suspect they are revising their plans as we speak. Probable looking at future flights of Zepplins!!! _________________ Men argue, nature acts !
Voltaire
"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
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