...more airline DOOOOOOMMM prognostication


All the responsibility none of the authority

The International Air Transport Association has doubled its estimates for global airline industry losses compared to its figure of three months ago. That presages another round of carrier bankruptcies similar to these in the early part of the decade. Reuters reports that the IATA expects the red ink at the world’s airlines to hit $9 billion this year. The main culprit is the same as it was last year–rising fuel costs. That is now married to a sharp drop in traffic.
Most of the Chapter 11 filings during the 2008 affected small airlines, at least in America. That could change this year if oil continues to climb toward $100 and the plunge in ticket sales gets worse. AMR (AMR) and United (UAUA), which have relatively weak balance sheets, are the most likely candidates to have to file for Chapter 11. They might be saved by mergers with stronger US carriers, or, if the government would allow it, flag carriers from Asia or Europe.
M&A may not save carriers like United. The problems in the industry are systemic. The savings of combining two airlines, with all of the risks of labor problems and customer service disruptions, may not be attractive enough to an airline with a strong balance sheet. The sector’s problems are so severe that airlines may decide that the distraction of acquisitions poses too great a risk in an economic environment that could force hundreds of millions of dollars of losses on each of the large carriers.
Now that the government has set the precedent of helping banks and auto companies, it may be tempted to try to keep the American airline industry from a series of corporate failures. The largest firms in the sector still employ tens of thousands of employees each. The chance to keep another US industry from a series of catastrophes may be too great for the Administration to resist.
The US airline industry will be restructured, whether it is in court, through M&A, or due to government intervention.
Douglas A. McIntyre
Does 121 freight fall under the auspices of the IATA like they mention in the article? Just curious.
I have to agree heavily that some form of regulation needs to be done, at this point it seems to be necessary. I am sure there are many CONS of doing this but how many more years of hearing bankruptcy after bankruptcy till something is done. I just want there to be SOMEONE (profitable) around to fly for someday, lol!
I like how they say the government might be ready to bail out the airlines... didn't they do that a few times already or am I just delusional?
I like how they say the government might be ready to bail out the airlines... didn't they do that a few times already or am I just delusional?


I think the only airline that actually got money from the stabilization board was America West. United tried to get it and they told them to pound sand, which was a surprise since it's headquartered in Chicago and Denny Hastert was the speaker of the house at the time.

I counted on them getting it and it was one of the worst stock trades in my life. I figured they'd get the money, and the stock would pop.

I'm sure the airline industry is already somewhere on Obama's list of things to control.

Would that be so bad? I want you to think back to the days when the airlines were regulated. Sure, Jethro from the trailer park couldn't travel because he couldn't afford it, but the career path was certainly better.

You might find that if the airline industry had that career path again, there would be a lot more people who wanted in, thus increasing the talent pool.

And passengers might find that instead of being crammed into a fully stuffed plane where the person in front of you is so close that if she's under 18 you'd be arrested in half the states in the country they'd have things like meals on planes and leg room again.

Having said that, I highly doubt Obama wants to touch the airline industry with not just a ten foot pole, but a 100 foot one.

He's already got a thoroughly screwed up industry to deal with. Two of them, actually. That'll keep him busy for a while.