Ooops! A boo boo! Bye Tom
Sir Richard stated last weekend that while Virgin were doing good business, "it is time to batten down the hatches" for "the coming recession". Wise talk from a wise man in my view. Wondered why he was unloading a couple of financial business'!
Cosmo has made the point that a recession can be "scare talk" driven. That is a fair point in my view, but when the manufacturing industry goes into recession a huge succession of other industries follow them. In 1990/2 many thousands of business'went under, and a lot more than usual are going now, as we speak, according to Dun and 'Queerstreet's' figures. Bankruptcy's are on the increase too - all signs of a recession on it's way. The fallout will continue long after the recession is over too.
The airline industry - not necessarily the alliances - the independents, will have a tough time as they did 10 years ago. Less people going on holiday and less people travelling. If they have not made hay in the shoulder months April-October, they will have a problem if their reserves fail to sustain them. The low cost operators will almost certainly reap the benefits as cheaper fares are much sought after. The larger carriers, will bear the brunt of the downturn, and the alliances will pick up more business from the travel industry, some of whom will also tumble under the pressure. This will leave a hard cell from the airlines and the travel trade to carry on. No-one daring to put their heads above the parapet until it looks like it's all over. Then the cycle begins all over again. That is how it happened before, so history will more than likely repeat itself.
My two operations flew through two recessions in the 70's and 80's. But only because the core business did not rely on carrying people. But we still had to batten down the hatches.
How long it will last is anybody's guess. There will be guesstimates from the City and everywhere else, from all kinds of so-called pundits. The fact is it will last as long as takes. Simple but true.