Growing evidence that the downturn is upon us....
PPRuNe Handmaiden
GSB,
Our owners aren't customers. There's a few that do make their money in the areas that you describe, but there are many that make their money from other sources. Also, many of our owners are from Europe so they (at the moment) appear to be less affected by the current events affecting the Pound and the Dollar.
Our owners aren't customers. There's a few that do make their money in the areas that you describe, but there are many that make their money from other sources. Also, many of our owners are from Europe so they (at the moment) appear to be less affected by the current events affecting the Pound and the Dollar.
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I would guess many here would be very interested to hear if you see/feel any fall off in demand over the next few months from your clients. Please keep us informed as it is very valuable information for wanabees
The coming crisis will affect all sectors of aviation. I expect fractional jet business to be the least affected. The margins are meaty, the USP is strong and the customers on the whole are sold on the product and money ain't a problem, more a concept.
I'm going to go out on a limb here and ask you all (Wannabes) to read something.
Its by Paul Krugman and its 5 months out of date at this point but its STILL the best summary of the present economic problem that I've read in a digestible 1,000 words:
http://www.nytimes.com/2007/12/14/op...in&oref=slogin
It was in the New York Times. Because the UK is a little (9 months) behind the US I think its an excellent summary of where we are now in the UK. I appreciate we have a wider audience - my apologies to them for being parochial.
As a Wannabe you NEED to grasp that this time there will be a recession and that a recession will hurt the massively expanded industry of commercial aviation very hard. Many of you aspire to a job such as mine as a Captain with a large UK airline. I don't blame you - I aspired to it like hell - and love it to bits.
But In No Small Part it is dependent on the spending of people in the economy who will be - frankly - wiped out in the 'economic turbulence' of 2008 - 2009..
Hang back from betting the farm. That's all I am saying.
WWW
I'm going to go out on a limb here and ask you all (Wannabes) to read something.
Its by Paul Krugman and its 5 months out of date at this point but its STILL the best summary of the present economic problem that I've read in a digestible 1,000 words:
http://www.nytimes.com/2007/12/14/op...in&oref=slogin
It was in the New York Times. Because the UK is a little (9 months) behind the US I think its an excellent summary of where we are now in the UK. I appreciate we have a wider audience - my apologies to them for being parochial.
As a Wannabe you NEED to grasp that this time there will be a recession and that a recession will hurt the massively expanded industry of commercial aviation very hard. Many of you aspire to a job such as mine as a Captain with a large UK airline. I don't blame you - I aspired to it like hell - and love it to bits.
But In No Small Part it is dependent on the spending of people in the economy who will be - frankly - wiped out in the 'economic turbulence' of 2008 - 2009..
Hang back from betting the farm. That's all I am saying.
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That article does ring a few bells regarding the current situation. Don't know what it's like on the mainland, but driving around in N.Ireland recently I haven't seen a single "sold" sign on any houses. Loads of "for sale" signs though.
Still amazes me to meet young chappies at my local flying club who are off to start integrated courses in the next few months.
Still amazes me to meet young chappies at my local flying club who are off to start integrated courses in the next few months.
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http://www.dailymail.co.uk/pages/liv...n_page_id=1770
Holiday bookings down already.
I doubt business aviation will escape scott free i imagine a large amount of private jet clients are city boys. dont think you'll be taking a citation if your firm has just lost 2billion $.
so many of my friends are worried about their jobs at the momment , especially the guys at citi bank. i think its something like 20% of the UK GDP comes from the city.
Holiday bookings down already.
I doubt business aviation will escape scott free i imagine a large amount of private jet clients are city boys. dont think you'll be taking a citation if your firm has just lost 2billion $.
so many of my friends are worried about their jobs at the momment , especially the guys at citi bank. i think its something like 20% of the UK GDP comes from the city.
This guy doesn't mince his words:
TOULOUSE, France, April 23 (Reuters) - Oil prices well above $100 a barrel will drive most of Europe's low-cost airlines out of business, the head of EasyJet's French subsidiary said on Wednesday.
The stark warning of a cull of low-cost airlines came as the British budget airline's shares fell more than 4 percent after another spike higher in oil prices towards $120 a barrel.
"There are currently about 50 low-cost carriers on the European market -- that's absurd," Francois Bacchetta, managing director of EasyJet France, told a news conference.
In a few years' time there will be no more than about three or four of us left in Europe," he said.
He was speaking at a briefing about a new EasyJet service between Toulouse and Lyon.
Traditional network carriers like Air France KLM have slapped extra fuel surcharges on ticket prices in recent months to help compensate for soaring crude oil prices.
"If we ourselves passed on these increases completely we would have to raise ticket prices by 10 percent in one go and our payload factor (the proportion of seats sold) would fall from 85 percent to 60 percent. Our whole low-cost business model would be thrown into question," Bacchetta said.
"The most competitive companies like Ryanair or ourselves will survive, along with one in Germany and perhaps one more in Europe. The others will die or merge as cripples. This phenomenon will even touch so-called normal carriers."
EasyJet issued a profit warning last month, citing higher fuel costs.
http://www.reuters.com/article/marke...32471920080423
WWW
TOULOUSE, France, April 23 (Reuters) - Oil prices well above $100 a barrel will drive most of Europe's low-cost airlines out of business, the head of EasyJet's French subsidiary said on Wednesday.
The stark warning of a cull of low-cost airlines came as the British budget airline's shares fell more than 4 percent after another spike higher in oil prices towards $120 a barrel.
"There are currently about 50 low-cost carriers on the European market -- that's absurd," Francois Bacchetta, managing director of EasyJet France, told a news conference.
In a few years' time there will be no more than about three or four of us left in Europe," he said.
He was speaking at a briefing about a new EasyJet service between Toulouse and Lyon.
Traditional network carriers like Air France KLM have slapped extra fuel surcharges on ticket prices in recent months to help compensate for soaring crude oil prices.
"If we ourselves passed on these increases completely we would have to raise ticket prices by 10 percent in one go and our payload factor (the proportion of seats sold) would fall from 85 percent to 60 percent. Our whole low-cost business model would be thrown into question," Bacchetta said.
"The most competitive companies like Ryanair or ourselves will survive, along with one in Germany and perhaps one more in Europe. The others will die or merge as cripples. This phenomenon will even touch so-called normal carriers."
EasyJet issued a profit warning last month, citing higher fuel costs.
http://www.reuters.com/article/marke...32471920080423
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You don't let up on your doom & gloom trip do you!
What is becoming clear is that the economic situation will result in a downturn in seats sold however it is likely to be the weekend break that the British public drops not the two week family hoiliday.
This is why the likes of Ryanair and Easyjet are panicking, the waffer thin margins they run on are likely to be erroded very quickly, the more traditional tour operators who sell the package hoildays are likely to be less hard hit as the British would rather sell there granny than miss out on the annual two weeks in the sun.
I was rather hoping that this thread was slipping off the radar as it seems to be the depositry for all the bad news can be found, however the back pages of Flight seem to be crammed with jobs a fact the at WWW seems to not have taken into account............... but good news seems not to have the same impact.
What is becoming clear is that the economic situation will result in a downturn in seats sold however it is likely to be the weekend break that the British public drops not the two week family hoiliday.
This is why the likes of Ryanair and Easyjet are panicking, the waffer thin margins they run on are likely to be erroded very quickly, the more traditional tour operators who sell the package hoildays are likely to be less hard hit as the British would rather sell there granny than miss out on the annual two weeks in the sun.
I was rather hoping that this thread was slipping off the radar as it seems to be the depositry for all the bad news can be found, however the back pages of Flight seem to be crammed with jobs a fact the at WWW seems to not have taken into account............... but good news seems not to have the same impact.
This thread does cover the most important Wannabe issue today - the recession and it impact on airline hiring.
There are no more than 500 jobs in the back of Flight. Any one of the top ten UK airlines going under would release that number of qualified, experienced and immediately available.
Do you refuse to see that the large US carriers are once again in dire trouble and facing Ch11? Does that not point to you the way Europe will be by next year?
Today you have the UK biggest homebuilder Persimmon suspending building any houses.. You have mortgage lending for March 08 down 46% on March 07. Last year the good old British consumer 'released' around £14billion from their residential property.
Every man Jack of them then spent that money on something. For a good many it was cars and holidays and 52 inch goggle boxes. ALL that money, all that £14billion just isn't going to happen this year. As consumer spending no accounts for over 60% of the UK economy it doesn't take a genius to spot the recession in the room.
Normally the goverment would now ramp up state spending, build a few motorways, airports, replace the power generation system etc. Unfortunately the government is almost as badly in debt as the consumer and thus we have the teachers on strike as a taster for a winter of discontent. Eggs, Milk, Bread etc all up by 40%+ and you in the State sector only allowed a 1.9% pay rise..
At first they said the boom would continue, then that a slowdown was possible, then happening and now they say that a recession can be avoided. It can't.
Wannabes taking on huge debt in the hope of hard to get jobs in an industry cruelly exposed to recessionary contraction NEED to be aware and to have considered the risk properly. I merely point out some of the evidence as it occurs - which is daily. People will do what they want and there is no slow down in the application rate at Kiddlington or Bedford (though I suspect the Euro must be hurting FTE).
WWW
There are no more than 500 jobs in the back of Flight. Any one of the top ten UK airlines going under would release that number of qualified, experienced and immediately available.
Do you refuse to see that the large US carriers are once again in dire trouble and facing Ch11? Does that not point to you the way Europe will be by next year?
Today you have the UK biggest homebuilder Persimmon suspending building any houses.. You have mortgage lending for March 08 down 46% on March 07. Last year the good old British consumer 'released' around £14billion from their residential property.
Every man Jack of them then spent that money on something. For a good many it was cars and holidays and 52 inch goggle boxes. ALL that money, all that £14billion just isn't going to happen this year. As consumer spending no accounts for over 60% of the UK economy it doesn't take a genius to spot the recession in the room.
Normally the goverment would now ramp up state spending, build a few motorways, airports, replace the power generation system etc. Unfortunately the government is almost as badly in debt as the consumer and thus we have the teachers on strike as a taster for a winter of discontent. Eggs, Milk, Bread etc all up by 40%+ and you in the State sector only allowed a 1.9% pay rise..
At first they said the boom would continue, then that a slowdown was possible, then happening and now they say that a recession can be avoided. It can't.
Wannabes taking on huge debt in the hope of hard to get jobs in an industry cruelly exposed to recessionary contraction NEED to be aware and to have considered the risk properly. I merely point out some of the evidence as it occurs - which is daily. People will do what they want and there is no slow down in the application rate at Kiddlington or Bedford (though I suspect the Euro must be hurting FTE).
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What is becoming clear is that the economic situation will result in a downturn in seats sold
The same seem to apply in the US, all the bankruptcies and capacity reductions are not caused by the economic downturn:
"Demand for travel typically falls after a recession has started. To date, airlines have not seen a significant decline in demand."
http://www.nytimes.com/2008/04/23/bu...ss&oref=slogin
The difference between a downturn imposed by energy prices instead of economic weakness is in my view the fact that it is for the long term without a solution in sight.
Okay, now it's time for good news
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Oil price is one thing, £-$ exchange rate is another altogether.
No-one ever points out that in the time that the oil price has gone up 40-50%, the US$ has lost about 40+% in value.
It wasn't so long ago that oil cost $70 per barrel and the £ got you $1.40. However, at $2 per £, a fair chunk of the oil price rise has actually been paid for us by the Americans! In fact, the £ has been worth $2 for a lot longer than the oil price has been high, so we Europeans have had a decent time of it for a while - it's just catching up with us now.
I think that a lot of talk of doom and gloom is a self-fulfilling prophesy - if the suits in the city talk long enough about there being a downturn then they will make it happen. The world financial markets run on rumour and optimism/pessimism - facts rarely enter the equation.
As for training, the FTO at which I work has never been more busy - we are actually at the point of turning customers away.
No-one ever points out that in the time that the oil price has gone up 40-50%, the US$ has lost about 40+% in value.
It wasn't so long ago that oil cost $70 per barrel and the £ got you $1.40. However, at $2 per £, a fair chunk of the oil price rise has actually been paid for us by the Americans! In fact, the £ has been worth $2 for a lot longer than the oil price has been high, so we Europeans have had a decent time of it for a while - it's just catching up with us now.
I think that a lot of talk of doom and gloom is a self-fulfilling prophesy - if the suits in the city talk long enough about there being a downturn then they will make it happen. The world financial markets run on rumour and optimism/pessimism - facts rarely enter the equation.
As for training, the FTO at which I work has never been more busy - we are actually at the point of turning customers away.
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Exactly my point. European airlines buy their fuel with US dollars that have in turn been bought with high value Sterling/Euros and so get a good exchange rate! The weak dollar HELPS keep the fuel cost down, and although there has been some increase in real costs, a lot of it is spin.
The fact that the dollar has been weak for a long time now (most of GWB's term as president!) means that the European airlines have been enjoying cheap fuel for a long time.
The fact that the dollar has been weak for a long time now (most of GWB's term as president!) means that the European airlines have been enjoying cheap fuel for a long time.
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Yes true... but it is only one side of the story. Airlines such as BA loose out when converting US passengers paying in dollars back into sterling. The same goes for the likes of easyJet with the european passengers.
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"I blame the Daily Mail.....For everything"..... that is possibly the most sensible thing ever posted on Pprune....
The oil price has gone from $10 to $120 in 7-8 years.... that must be some currency move
The oil price has gone from $10 to $120 in 7-8 years.... that must be some currency move
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UK press starting to pick up on current problems in US aviation industry....
http://business.timesonline.co.uk/to...cle3810477.ece
http://business.timesonline.co.uk/to...cle3810477.ece
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What the papers say
As we all know the standard of reporting in the papers on aviation matters is appauling so why should the standard of reporting on financial issues be any different ?
Time to get some opinion from another sorce?............ I think so!!
Last night my wife attended a meeting with the local MP, the guy had untill recently a shadow finance remit and so has worked on these issues for some time.
In his opinion the total financal crash that some in these forums are predicting won't happen. He said that the economic conditions are far better than in the late 70's and so comparison with that recession was not valid.
The meeting was remarkably free from party politics with his general opinion being a bit of a dip in the economy followed by an upturn quite soon.
This is still only the opinion of one MP but due to he recent work in the field would tend to trust it rather more than the opinions of the Daily Mail or the proffits of doom & gloom on this forum.
Time to get some opinion from another sorce?............ I think so!!
Last night my wife attended a meeting with the local MP, the guy had untill recently a shadow finance remit and so has worked on these issues for some time.
In his opinion the total financal crash that some in these forums are predicting won't happen. He said that the economic conditions are far better than in the late 70's and so comparison with that recession was not valid.
The meeting was remarkably free from party politics with his general opinion being a bit of a dip in the economy followed by an upturn quite soon.
This is still only the opinion of one MP but due to he recent work in the field would tend to trust it rather more than the opinions of the Daily Mail or the proffits of doom & gloom on this forum.
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The Times report was a sensible and balanced report and was a fair representation of the situation today.
The fact is that for the general population inflation is running at a far higher level that the official statistics show.
For those on a fixed income the problems are severe; food and fuel costs take a higher proportion of income now than ever and that reduces the amount to sopend elsewhere.
Fixed income people tend to be pensioners and it has been the grey pound which has fueled the growth in travel especially for the low cost carriers.
Tie that in with the fall in value of the £ against the € where the majority of travellers have been going and the money available is even less.
The worst hit will have it bad but for the airline businesses they will need to get ready for a difficult time and I suspect already have their layoff plans ready and waiting.
The fact is that for the general population inflation is running at a far higher level that the official statistics show.
For those on a fixed income the problems are severe; food and fuel costs take a higher proportion of income now than ever and that reduces the amount to sopend elsewhere.
Fixed income people tend to be pensioners and it has been the grey pound which has fueled the growth in travel especially for the low cost carriers.
Tie that in with the fall in value of the £ against the € where the majority of travellers have been going and the money available is even less.
The worst hit will have it bad but for the airline businesses they will need to get ready for a difficult time and I suspect already have their layoff plans ready and waiting.