Bankruptcies loom for airlines - report

[RamboLiberal]

Source: CNN

Thousands of layoffs, hundreds of grounded planes and 21 price increases may not have been enough to save the embattled airline industry from the damaging effects of high fuel prices.

According to a report on the nation's top airlines released by Fitch Ratings Tuesday, record fuel costs and weak cash flow may lead to "multiple bankruptcies and liquidation" for major U.S. airlines in 2009.

"The industry's current structure is unsustainable in the current fuel environment," said William Warlick, a senior director at Fitch and author of the report.

Airlines have attempted to cut costs by reducing capacity, downsizing, and hiking fares and fees, but the moves may not be able to improve their cash flow.



Read more: http://money.cnn.com/2008/07/15/news/economy/airlines/index.htm?postversion=2008071518

[bluestateguy]

1. What ever happened to all that corporate welfare we gave them back in 2001?

How fast did they piss all that money away?

[BlueCollar]

8. Seen the price of a barrel of fuel lately?

Jet fuel is expensive...

:think:

[SteelPenguin]

14. So raise ticket prices

Their costs rise? Raise ticket prices. The whole industry though is just in one big game of constant chicken against each other since deregulation. Who will go bankrupt first. Only a few run sustainable businesses, the rest are a joke that we bail out every few years.

Next time they fail, we shouldn't bail them out, and then new companies with different attiudes may stand a chance.

[BlueCollar]

41. You obviously have no understanding

of the dynamics of the basic business of transportation.

May I recommend you do a little research into the dynamics of the transportation industry?

Raise ticket prices to what end. The consumer is being squeezed by the same costs of fuel. They are choosing to stay home, travel less....

Cheaper seats aren't the answer and neither are more expensive seats.

Get the oil speculators out of the business and then maybe you might have an argument,

[SteelPenguin]

52. No I understand them. They exist in their own reality.

They live in a false reality where inexpensive jet fuel and a public that takes to the skies on a whim is the baseline. It was always a house of cards built on cheap oil, and never could have lasted forever.

[barb162]

60. The false reality has been going on about 30 years or less

at least for air travel. Air travel in the 50s an 60s was very expensive. It became a lot cheaper in the 70s. It's now going to end. It will be again like the 50s and 60s and then probably end for the great majority of Americans. No more three day weekend trips to Europe or anywhere else.

[barb162]

58. Oil speculators have little to do with peak oil problems.

Speculators are the bogeyman but it's really the oil supply/ depletion problem. People don't want to deal with it.

The airlines will shrink in size and cut more routes. They should probably charge at least 20% more than whatever they think the fuel will cost at the time of the flight to give themselves some sort of minor profit.

[Hawkowl]

29. Dumbass

Hey, there wasn't any give aways in 2001. NONE. All the government did was "guarantee" repayment so a few of the airlines could actually get loans from tight fisted bankers.

[BlueCollar]

42. Amen brother...n/t

[Bluebear]

65. Another amen.

[babylonsister]

2. YES, it's really bad. For anyone who thinks it isn't or their fault,

think again.

Telling people to go sucks.

[LeftyMom]

3. American Airlines (AMR, Fortune 500) and Continental (CAL, Fortune 500) were listed as "stable."

Well, that's good news for me at least. I have a cross-country flight on American next month.

[ihavenobias]

4. Sure, sure, now the airlines are going bad? This American public sure has an overactive imagination

so says Phil Gramm.

[ForrestGump]

5. I'm not an economist, or whoever decides such things,

but doesn't it seem that we should be nationalizing at least one of the extant airlines while there're still any actually flying?

I harbor tremendous animosity toward US airlines, in general (the major carriers, anyway, and even then it's the airlines as business entities and the corporate greedsters who run them, and create policy, that I find disgusting), but their strife is a real concern and is really no less than a matter of national security. I don't know how the fatcats who've gutted some of these major US flag carriers are faring, but the people who actually do the work for these companies are losing jobs left and right, aircrew, ground crew, and everyone else... :(

[happyslug]

33. We will do what we did for Passenger Rail in the 1960s

Try to find a way for it to die without anyone taking the blame. That was the purpose of Amtrak, to leave Passenger rail to die while going through the motion of protecting it.

Now Amtrak was saved by three things, first Passenger Rail Service had been part of the large Fright rail Service. The Fright lines was willing to turn their passenger service over to anyone, since they had been losing money on it for over ten years (And some economist believe Passenger Rail NEVER made a profit, Fright is what made railroads profitable not Passengers). Thus the initial cost to Amtrak of their Passenger Trains were minimal, the Fright line just turned them over to Amtrak, who could depose of them as Amtrak saw fit. This gave Amtrak a monopoly on rail service, and some extra cash to buy more modern equipment (Even Scrape has value).

The second was the energy crisis of the 1970s, which reverse the trend since the 1930s of dropping oil prices, oil reaching it lowest price in the mid-1960s. This increase in price increased the demand for rail, as Amtrak took off (Through overall rail passenger traffic dropped off).

The third factor was Congress, which provided subsidies to rail traffic, never enough to do the job right, but enough to keep Amtrak in business

The fourth Factor was a series go Good management, who managed to take a declining business and slow down and stop the decline. Part of this was the result of the Above, but Amtrak management did a good job of facing the problems of Amtrak and the above problems.

If you look at the above, what do the Airlines face? There is NO large FRIGHT airline that want to get rid of its money losing Passenger Service, thus the "subsidy" provided by the Fright Rail lines to Amtrak does NOT exist.

The energy Crisis of today, emphasis REDUCED oil Usage, which can be done by Rail, but NOT by the Airlines.

Congress is always a factor, but Johnson provided Nixon a balance Budget for his first year in office, and Nixon ran small deficient afterwords, thus Congress has the money to spend to help Amtrak, that is NOT true today, with the War in Iraq and the collapse of the Housing Bubble.

As to management, In my opinion no matter HOW good the management of the Airlines are, the present crisis is to great, The Airlines breath cheap oil and they are NO ready alternative to oil for airplanes. Amtrak depended on Electrical power in the North East, diesel in the rest of the Country at levels no where near what a airplane uses. That is a tough hurtle to get over, it would take a very good management team to do so, and most management teams would look at today's airlines and say, wait till ALL OF THEM ARE BANKRUPT and then buy the assets for pennies on the Dollar.

Thus I see Congress doing what it did for Amtrak, after ALL the airlines are bankrupt taking them over and forming one last airline, and then watch it die as Amtrak was suppose to do in the 1970s.

[barb162]

38. I'd like to see nationalizing of both United and AA

just to keep some lines flying in this country.

[Sen. Walter Sobchak]

6. A moment of Zen

A few weeks ago I was driving along the 405 near John Wayne Airport and traffic was at a stand-still in the car next to me there where these white trash kids listening to rap music.

and as a Delta Airlines plane passed inches overhead they were playing a song that goes "Die Motherfucker, Die Motherfucker Die" over and over again

And I broke out laughing - I wish nothing less on Delta Airlines.

[lanlady]

9. my kid just flew Delta

You might want to direct your hateful, crude remarks at something that does not involve the deaths of fellow human beings.

[MaineDem]

12. I agree with you

There are people on those planes.

[dysfunctional press]

16. i think he was dircting the thoughts at the company- not planes full of passengers.

i'd like to see delta, as a company corkscrew into the tarmac at full throttle. they started the whole process of cutting commissions to travel agents, back when i was in the industry. they suck.

[Sen. Walter Sobchak]

25. You seriously miss the point,

I don't wish physical harm on anybody - but the airline industry will never return to health when it continues to be dominated by the worthless legacy carriers who need to hurry up and die.

In a sane world these dysfunctional companies would fail and new ones would take their place. But while they can get little right they always seem to find a way to rise to the occasion and destroy any upstart airline who might take their place. This is usually financially suicidal but the most lax corporate bankruptcy system on the planet has deemed the legacy airlines too large to fail. But rather than restructuring through the bankruptcy process they linger as long as possible before leaving Chapter 11 as sick as they went in only to repeat the process a couple of years later.

Until the market is changed in such a way that the sick and dying airlines are unable to crush the young and healthy start-ups with the assistance of the bankruptcy court and federal inaction on monopolist behavior we will never move past this stage.

There is no such thing as too big to fail and these guys needed to fail decades ago.

[BlueCollar]

43. As an employee of a legacy airline

who has given and given...I'd like to thank you for your support.

Your field of employment is?

:sarcasm:

[Sen. Walter Sobchak]

47. And what has your employer not yet stolen from you?

Is your pension intact?
Are your work rules unchanged?
How are the benefits?
Is your station adaquately staffed?

How is the executive compensation? are they giving and giving too?

I work in legal finance and worked on an airline bankruptcy.

[BlueCollar]

82. Items 1-3 unchanged

Item # 4 - No

Legal Finance huh?

Managed to screw everyone on payroll while GE financed the bankruptcy?

[Megahurtz]

49. Don't worry

I know you weren't referring to passengers being killed. :think:

Sheesh. :eyes:

Holy shit. Some people should just lighten up.

[jmowreader]

27. He was referring to the airline itself, not to its customers

Who'd want the PASSENGERS to die? No one here.

But the mismanaged company they chose to do business with? Yes, THAT needs to die.

[closeupready]

35. Yep. Delta was a big player in that game of smothering upstart regional airlines

back when they had the resources to do it. I don't know if they could afford to do it these days.

[truthisfreedom]

7. I don't understand the hatred for airlines in this forum.

I see so much disdain for these companies.

Look, we need multiple airlines to be in business so we can have a variety of choices for tickets. When the number of choices drops, ultimately, the prices for even your favorite airlines will increase. Will the hatred then shift to those? I don't get it.

[ForrestGump]

10. The airlines have earned it

Some more than others.

But I'm not sure how many here are actually applauding any US airlines going under. It's not good for the country (and I'd say that the way the major airlines have been run for many years has not been good for the country, either), including for the reason you identify, and they're major employers that also peripherally provide a livelihood for thousands of others engaged in the hospitality and travel industries.

Something has to change, that's for sure.

[WriteDown]

17. Many apparently....

Don't remember the prices from 20 years ago. Flying was something that was done on VERY special occassions. Many people had never flown at all. We've become accustomed to very cheap tickets though.

[jmowreader]

28. I remember the prices from 20 years ago

While high, an airline could afford to buy fuel and pay for proper maintenance at those price points.

Now we have deregulation and...well, you've seen the results. Cheap ain't good if it means every passenger costs the airline money.

[BlueCollar]

44. I used to fly from SFO to LAX for $15.00

on a Boeing 747...

When I first got started in this business...

and that wasn't an employee fare.

[barb162]

63. That's pretty amazing...I never heard of a 15.00 fare anywhere

When was that and how long did it last?

[BlueCollar]

81. 78-79 if I remember right

Pan Am had a flight...think it was flight 505 which was essentially a positioning ferry flight. Started in Japan and flew to Seattle and then down to SFO. Stayed overnight and then ferried to LAX before going on to South America.

Since the plane was being repositioned, the seats were essentially empty.

[Hawkowl]

30. Indeed

That is in all likelihood going to stop. You want cheap travel? Go Greyhound. Ticket prices don't even cover the cost of fuel in most cases, let alone aircraft leases, maintenance and the pitiful crew wages.

What is happening right now is a massive reduction in the number of available seats. Look for a reduction of about 40% over the next few years. That is designed to DOUBLE ticket prices. Airline travel is not a right, it is a luxury item, and airlines owe passengers nothing extra--just safe passage. There is literally an airline crash every other week, just not in the U.S. So next time your pissed off because your an hour late, just be happy you're not flying a third world or Chinese airline and aren't in danger of never arriving.

[KamaAina]

69. Greyhound has also been cutting routes right and left

You want cheap travel? Go Greyhound.

Most mid-size cities are screwn unless they happen to be on an interstate between two large ones. Bloomington, IN, for instance, is now off the map.

Honolulu, of course, always was off the map. Should we bring the Lurline and the Matsonia out of mothballs?!

[Chovexani]

74. US Airways is nothing but Greyhound with wings

Might as well take the real thing at that point, at least you don't have to deal with the TSA.

[Gormy Cuss]

40. Maybe it's because the airlines have been treating passengers like yesterday's garbage for too long.

Airlines have crammed in more rows, adding steep change fees, cut out in-flight amenities, and have started charging for even the first checked bag. Are we supposed to love an industry like that?

Add to that the the airlines's support of the TSA's annoy-the-passengers-security system and there few left who are fond of flying these days.

Airline ticket pricing strategies are a big part of the problem, BTW. The sooner they drop the super-low excursion prices and super-high last minute prices and use a model more similar to other public carriers, the better.

[BlueCollar]

45. Proof please?

"Add to that the the airlines's support of the TSA's annoy-the-passengers-security system and there few left who are fond of flying these days."

[Gormy Cuss]

48. Customer sat surveys make it pretty clear that few are fond of flying these days.

The airlines have agreed to turn over passenger lists for data mining by the TSA and continue to do so, even though everyone knows that the terrorist watch list is fraught with error and many passengers are inconvenienced by it. Since the industry has lobbyists in Washington, I would imagine there has been a lot of deal making, most notably the roll back of the "no liquids" rule to an allowance of just enough for the road warriors to continue carryon only trips.
Since you work for the airline industry, why not point to even one protest by a legacy carrier over the shoe dance?

[Bonobo]

73. ding ding ding!!!!!!!! nt

[hogwyld]

77. We have a winnah!

I travel a lot, and with a lot of different airlines. It always seems as though the larger American carriers feel like the customer is a bother. Rude ticket counter people, indifferent gate people, and the constantly irritable flight attendants. The foreign carriers, while not perfect, at least understand customer service, and, no matter what, are always pleasant.

[Terry in Austin]

56. Airlines and the business of air travel

Air travel is basically a twentieth-century stunt that got way out of hand, enabled by cheap and seemingly unlimited fossil energy. As a mode of mass transportation, it's incredibly wasteful, and if you think about it, more than a little bit silly.

Yes, aviation is pretty cool and a lot of fun, like skydiving or ski-jumping. An adventure. A stunt. But not a good basis for a civilization's primary long-distance transportation infrastructure.

When air travel turned into a business, it became commoditized, and eventually the customers had much to complain about, much as they might about the service at a fast-food joint, for much the same reasons.

As a business, the airlines depended greatly on the distorted economics of abundant fossil energy, which turned out to be an exceptional and very brief period in history.

Now that period is passing, and the airline businesses are getting the props knocked out from under them. And we're surprised?

[liberal N proud]

11. Deregulation will have finally achieved it's goal

Without these airlines, Americans mobility will be severely curtailed. One more step in controlling people, keeping them from moving around and mingling with others.

[Tandalayo_Scheisskopf]

13. Yup.

You just got it exactly right.

[bdamomma]

26. exactly. borders, walls, no transport, what is next

you will be prisoners in your own country. or will train travel be the new thing. but what about those who want to travel out of the US, will the prices keep on going up to show only those with the funds can travel.

[Megahurtz]

50. I would bet that

that's a huge part of it.

[Dr.Phool]

15. I've got a flight on USA3000 tomorrow.

They've already put out notice that they are discontinuing almost all Florida service next month. I just hope I have a plane to fly back on Sunday. In fact, I almost hope they cancel the flight tomorrow, because I don't really want to go anyway. My wife's niece is getting married, and I really don't want to go any fucking way.

[barb162]

64. I don't blame you at all.

Florida is stinking hot as hell this time of year anyway.

[a la izquierda]

18. My husband used to fly a lot for business

and he thinks it's insane that the airlines keep cutting things on planes, such as entertainment (US airways is ridding their planes of movies on domestic flights), but raising costs. But we both need the airlines to keep ticket prices reasonable, as we have family on both coasts and we're stuck in the middle. Plus, my research sends me out of the country for months at a time.

In Mexico, they have two nationalized airlines, Aeromexico and Mexicana. Plus they have a bunch of very low cost airlines. And they have a very inexpensive and comfortable bus system that does not, contrary to popular belief, always require one to ride with chickens. ;) I take the bus a lot down there, and yes it does take awhile to get around, but it's not miserable like the greyhound.

Too bad train service is so darn expensive here.

[MaineDem]

21. I totally agree about the train service

I wish it was more efficient and not as expensive. Heck, if we had half the intercity train service they have in Europe it would be twice better than we have now. I take the train a lot here in the Northeast Corridor but I'd love to take it for longer trips if it was affordable.

[a la izquierda]

22. whenever i go visit my family in NJ

i take the train to NYC, or Philadelphia. Living in Oklahoma, though, train service is non-existent. Two airlines have recently pulled out of our airport, which stinks. Prices will go up here, forcing us to have to travel to Dallas to find cheaper flights, which of course means a 3 hour drive and insane gas prices, etc.
They're trying to expand Amtrak service, but there is no light rail. And the bus system is abysmal.

[WriteDown]

31. Unfortunately or Fortunately...

I see us moving to a more European lifestyle. People will have to live very close to their families, preferably in the same town. Families will live in the same house for several generations. Many people will not stray far from their towns in their lifetime or at least for several decades. Very similar to Bavaria.

[a la izquierda]

32. oh god no.

can anyone tell me how to invent a teleportation device? i absolutely cannot live that close to some of my family members. i'd end up in jail.

[WriteDown]

37. The Europeans do it...

We will just have to learn. I feel your pain :).

[Megahurtz]

51. Lol!

I know what you mean! :thumbsup: It's not for me either! Sometimes I think that a life like that tends to lead to disfunction. :crazy:

[barb162]

61. In a few decades or less that will happen.

No getting around it.

[barb162]

39. There's nothing insane about raising costs when each flight

is losing money. They have to raise the costs substantially on all flights if they want to stay solvent. The fuel costs are killing the airlines.

[a la izquierda]

55. Well, I understand that.

However, what I don't understand is making flying so miserable but raising costs at the same time, i.e. eliminating all snacks, charging for soda (which some airlines want to do), getting rid of in-flight entertainment. That, plus constant delays, packed flights make flying horrible nowadays. Yet people still pay through the nose.

[barb162]

57. Planes have become cattle cars more so lately.

It's going to get worse and more expensive. That's maybe a good thing in the long run...people will travel only as a necessity. I am hoping the airlines raise their prices to where they need to be because then we won't have to bail them out. Right now they are losing money on every flight because of the fuel costs. It's not sustainable as it is. I am reading that after Labor Day the costs to fly will really jump. People think they have a right to cheap airfares, cheap gas for their vehicles and cheap fuel for their homes. We don't because we don't own the oil supplies. The shit is now hitting the fan. Airline flying will become a thing for the rich and I think the major airlines will become much smaller. Jet fuel will just keep getting more and more expensive as will other fuels. Our lifestyles will change very drastically. No more family reunions at resorts, no destination weddings, no regular get-togethers, etc. Train travel may become more popular if the railroads have the money to fix their tracks.

[MissDeeds]

19. What about Midwest Air

I heard they are cutting 40% of their workforce. Midwest is my absolute favorite airline, and we always choose them if they are flying to our destination.

[MaineDem]

20. My favorite too

Hopefully, they'll come out of this okay. I don't know though. They're cutting out the MD80s which isn't a bad thing so maybe they'll continue on/ I sure hope so. Especially since I have tickets to fly with them in August.

[MissDeeds]

23. I was checking their flights this morning

My husband and I are planning to fly into Boston, then trek north into Maine for leaf season, hopefully in late September/early October. Although he has two free tickets on Delta, we'd rather spend the money for the comfort and quality you get on Midwest. It's infuriating that when you fly out of KC to Boston on Delta, you have to go through Atlanta. Midwest offers two daily nonstop flights to Boston.

BTW MaineDem - we're hoping to relocate to Maine soon. Great state!

[JeanGrey]

54. Since you don't want your Delta miles can I have them?

[MissDeeds]

71. Well, you could...

but we're going to donate them to the troops. I just hope Delta doesn't fold before they can be used.

[JeanGrey]

78. A noble cause, so I give up. :-)

[BlueCollar]

46. Refer to "Steelpenguin"'s response

All they have to do is raise the fares.

[bikebloke]

24. Damn, I just bought an air ticket last week.

I hope United stays afloat until I return. So I can return. So either before or after my trip would be better than being stranded.

[happyslug]

34. Check out Amtrak, they have openings, but they get book quickly now a days.

Amtrak Web Cite:
http://www.amtrak.com/servlet/ContentServer?pagename=Amtrak/HomePage

[bikebloke]

59. Thanks...

Unfortunately, I'm going to Argentina. One last adventure before we're back to horse and buggy.

[happyslug]

67. US to Argentina by Rail is hard, you always can hop a Fright to Mexico..

But have you looked into a Tramp Steamers?
http://www.freightercruises.com/

I didn't think such travels were still done, but apparently there are. I make no guarantee about these steamers for all I can see is what I see on the Web....

Some others:
http://www.43things.com/things/view/575344/travel-the-world-by-tramp-steamer

Back to Trains in South America, again no comments except they are on the net:
Latin American Rail Transportation:
http://www.seat61.com/SouthAmerica.htm
http://www.railserve.com/Passenger/South_America/

[barb162]

36. It's getting uglier by the day.... n/t

[bemildred]

53. Bring back passenger rail NOW! nt

[barb162]

62. Yes, but the tracks have to be fixed up a lot more.

People just have to realize all travel of all types will be more and more expensive. Lifestyles will be changing.

[Bluebear]

66. 'Thousands of layoffs', begins the articles, but "fuck the airlines" say many on this thread.

Incredible.

[Terry in Austin]

70. Need to modernize -- airlines are a 20th century holdover

It's an obsolete industry.

The airline companies don't have any particular entitlement to profits, so yeah, they're pretty much screwed if they think they do.

It's also worth noting that it was the companies that did the laying off, so it's one more case of corporations sticking it to working people.

[Chovexani]

75. Welcome to the New DU

Tasty just like New Coke.

[bemildred]

76. Yes indeed, fuck the airlines.

The airlines, their shitty management and support for Republican economic policies and politics, are responsible for the layoffs, not me. This is without ever getting into what a shitty experience it is to fly nowadays. I am all for public aid and support for the displaced employees, welfare in every form and shape, support for aggressive and effective unions, and so on, but I still say "Fuck the Airlines".

[Texano78704]

68. Southwest

How it it that some airlines are actually still able to make a profit?

[Bonobo]

72. Because service sucks as far as I am concerned.

They sucked up their corporate welfare, service got even worse, ruder and unpleasant and we all stopped flying.

That's what happened.

[lib2DaBone]

79. I would Rather Eat Bugs......

I would rather eat bugs than fly. The Asshole "Decider-in-Chief" has created the TSA.. THE LARGEST, most evil, hated, wasteful, arrogant, criminal, useless, fucked up organizationin in the history of this country! (Sorry I only mentioned the good parts)

[NickB79]

80. And another prediction of Peak Oil comes to pass

As the Saudis say:

"My grandfather rode a camel. My father drove a car. I fly a jet. My son will ride a camel."