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Oil at $130 - Mass bancruptcies expected.

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Oil at $130 - Mass bancruptcies expected.

Old 14th Jun 2008, 11:12
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Oil at $130 - Mass bancruptcies expected.

Interesting article (from E24 and translated by me) about the current oil price and its impact on US (and global) airlines.


"The airline industry in the US is about to crash. According a recent study several airlines will go bankrupt as a direct consequence of the ever rising oil prices.

If the oil stays around its current $130 several American airlines will not be able to pay its creditors by the end of the year. At current oil levels the total costs for the airlines will rise with 30 billion dollar, only 4 billion are expected to be able to be recovered by higher ticket prices.
"The result will be devastating for American job, families, companies and the entire American lifestyle" - this according the study from Airline Forecasts and Business Travel Coalition.
To cover the costs of operating with oil levels between $130-140 the tickets would have to be raised by 21-24 % and the amount of seats lowered by 18-20 %."

Tough times ahead.


CP
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Old 14th Jun 2008, 11:28
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And for this they can blame Bill Clinton and the Democrats.

http://www.ibdeditorials.com/IBDArti...98162929599517
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Old 14th Jun 2008, 16:09
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Yeah, let's tap into strategic reserves, so grandma can go grocery shopping in her new Escalade!

If anything, the oil crisis will teach Americans to walk across the street for a carton of milk and not drive bus-sized vehicles to run errands.
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Old 14th Jun 2008, 17:51
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Maxho I agree. The U.S. consumer will only conserve energy if it hurts them in the pocketbook.
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Old 14th Jun 2008, 18:12
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In the mean time Shell has made a profit of 6.7 billion ... And I wonder...???
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Old 14th Jun 2008, 18:28
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Yeah, let's tap into strategic reserves, so grandma can go grocery shopping in her new Escalade!
But not for long! US strategic reserve - about 700 million barrels divided by US imports @ 13 million barrels/day = 54 days supply if imports completely cut off. Poor grandma.
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Old 14th Jun 2008, 18:29
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>And for this they can blame Bill Clinton and the Democrats.

If it wasn't so sad, it would be funny. People actually believe this crap? What the editorial fails to mention is the Republicans controlled both houses of congress from 1995-2006, not to mention the White House from 2000-present.
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Old 14th Jun 2008, 21:47
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Tough times?

Business management is all about adjusting to change. No business model remains valid for very long, without some adjustment.
The adjustments are already in progress, as various US carriers park significant parts of their domestic fleets, and international destinations, which offer greater yield potetial at the moment, receive increased service.
There is no doubt that some airlines will either die, or be consumed in mergers.
There is also no doubt that when the dust has settled, there will still be ample service provided by US carriers, to destinations both internal and international.
There will be a very rough period of adjustment and change. Carriers will die, and people will lose their jobs. The airline industry is not the first to feel this, nor will it be the last.
At the end of the day, reports of the death of the American airline industry are no more than an apocoliptic fantasy, rather like the time-honored tradition of predicting the coming of the next Great Depression.
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Old 14th Jun 2008, 22:05
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The U.S. consumer will only conserve energy if it hurts them in the pocketbook.
Not just the US consumers.

Most of the developed world is still using energy as if it was at 1990 prices. The operation of the market will do more to encourage sensible energy use than all the politicians put together.
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