Fuel Prices
- Thread starter Vikedog64
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Cutting pay to subsidize the increased cost of raw materials should not even be considered.Vikedog64 said:With the current fuel prices, most analysts see DAL around 1b short in revenue this year. I see more paycuts to offset that or additional refinancing of debt or both. Any thoughts?
[post="256912"][/post]
luv2fly
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- Aug 21, 2002
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emily said:
No amount of conecessions will help if oil continues to rise at its current unabated rate. The frustrating aspect of it is that some analysts believe the current price is artificially inflated as much as 10-15 dollars a barrel due to world concerns. You pay more now to drive around in you car. You would think you would have to pay more to fly around in your plane. What a concept.
WorldTraveler
Corn Field
- Dec 5, 2003
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DL has a little more "furniture to burn" in its Delta Connection ownership but at some point really soon the industry's revenues and costs have got to stabilize. The fact that only WN is significantly hedged to not be absolutely scared to death by the current fuel prices says that the industry shakeout is likely to come soon.
Ray Neidl's assessment that FlyI, UA, US, and CO are all more precarious financially than DL says that one or more of them could well cease operations or be forced into bankruptcy before long. While AirTran and JetBlue are in no danger of failure, these fuel costs will hit them. Given the huge orders they have coming, they need places to fly their airplanes which means they are more interested in pushing someone over the cliff than taking a fare increase right now.
It is not possible to have just one financially secure airline in this country - which is what these fuel prices will do if left unchecked and capacity doesn't leave by fall.
Ray Neidl's assessment that FlyI, UA, US, and CO are all more precarious financially than DL says that one or more of them could well cease operations or be forced into bankruptcy before long. While AirTran and JetBlue are in no danger of failure, these fuel costs will hit them. Given the huge orders they have coming, they need places to fly their airplanes which means they are more interested in pushing someone over the cliff than taking a fare increase right now.
It is not possible to have just one financially secure airline in this country - which is what these fuel prices will do if left unchecked and capacity doesn't leave by fall.
If people don't or can't hunt deer, then lots of deer starve. That's what's happening right now in the airline biz. It's time for some to fold so that others can eat, and the sooner the better. I hope oil hits $60 or $70 for a few weeks - that should be enough to push UAL, USAir and Flyi out of the lifeboat. Maybe even CO; that would speed up AA's China rights, and DL would get the backup designation and the 2006 frequencies.
With some excess capacity gone, prices could finally rise.
With some excess capacity gone, prices could finally rise.
HGIEFOswitch
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- Nov 5, 2003
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Maybe it's rude, but nevertheless true. The quicker we get to the $70 a barrel range the better. There is way to much overcapacity. With a few airline failures, the remaining carriers could establish some price control. It's the cold and hard truth.
Fly said:
:down:
Do you, by chance, ever open your mouth on board your flights and let that mind of yours flow freely?
Anyone who equates hope that bankrupt airlines get it over with and go out of business with a hope that an airplane crashes is just too ignorant to be entrusted with the important safety functions performed by flight attendants.
WorldTraveler
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FWAAA,
DL really would not be helped that much by a failure of UA. Indy and US are what will help DL and they are alot more fragile. DL really needs to pick up some of UAL's assets and they can't do it until parts of their transformation place have been allowed to work. If DL succeeds at getting non-fuel costs down, they might have a chance. If they don't, DL is no better off than UAL which has gone through rounds and rounds of cuts and still comes up very short at the end of the month (and quarter and year). I suspect Simplifares is harming CO far more than they admit based on the size of the losses they are estimating. Only makes sense given that CO has largely focused on skimming off the highest value local passengers and carrying little low-yield connecting traffic - completely in contrast to DL.
Further, I'm not so sure that DL can handle much $60 or 70/BBL oil. If they do, it is only because they will sell off the connection carriers. That will do nothing to improve DL strategically, esp. if prime assets in the industry become available.
DL really would not be helped that much by a failure of UA. Indy and US are what will help DL and they are alot more fragile. DL really needs to pick up some of UAL's assets and they can't do it until parts of their transformation place have been allowed to work. If DL succeeds at getting non-fuel costs down, they might have a chance. If they don't, DL is no better off than UAL which has gone through rounds and rounds of cuts and still comes up very short at the end of the month (and quarter and year). I suspect Simplifares is harming CO far more than they admit based on the size of the losses they are estimating. Only makes sense given that CO has largely focused on skimming off the highest value local passengers and carrying little low-yield connecting traffic - completely in contrast to DL.
Further, I'm not so sure that DL can handle much $60 or 70/BBL oil. If they do, it is only because they will sell off the connection carriers. That will do nothing to improve DL strategically, esp. if prime assets in the industry become available.
FWAAA said::down:
Do you, by chance, ever open your mouth on board your flights and let that mind of yours flow freely?
Anyone who equates hope that bankrupt airlines get it over with and go out of business with a hope that an airplane crashes is just too ignorant to be entrusted with the important safety functions performed by flight attendants.
[post="257203"][/post]
Sounds lke you are getting a little worried that the extended delays in BK by UAL and US may have an effect on you? That's the way bk works. In some ways, these stays in bk may force another legacy carrier straight into ch 7 when they can't secure dip financing. Lately you have gotten louder about your wishes for us to liqudate to save you. Not going to happen soon enough to save you. Hoping for another's failure isn't the answer...perhaps your mgmt team should develop a sustainable business plan. Until then, you go ahead and dream your little dream and I'll dream mine.
Flying Titan
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- Oct 14, 2003
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I see a fundamental flaw in the assumptions that many of the posters here are making. Even if several carriers go out of business, that does not mean that there will be a significantly higher level of fare control. JetBlue, Southwest, and AirTran aren't going away and they're driving the fares. If carriers collapse, these carriers will certainly be the ones to expand the most - not the legacy network carriers.
Planes are already nearly full on most airlines and the carriers aren't making money. DL's CEO just pointed out that even if he could raise fares, the amount of that increase would probably only cover about 25% of the current shortfall due to fuel costs. I'm sure he realizes that if DL or any other carriers raise fares too much, they will simply push passengers to LCCs or keep them from flying at all. Don't assume that the elimination of a couple of carriers will turn the rest of the industry into money-makers. Unless fuel costs come back down to earth ($40/barrel or lower), the entire cost and revenue equation will still have to be changed. Right now, there are simply no good solutions - even if other airlines fail.
Planes are already nearly full on most airlines and the carriers aren't making money. DL's CEO just pointed out that even if he could raise fares, the amount of that increase would probably only cover about 25% of the current shortfall due to fuel costs. I'm sure he realizes that if DL or any other carriers raise fares too much, they will simply push passengers to LCCs or keep them from flying at all. Don't assume that the elimination of a couple of carriers will turn the rest of the industry into money-makers. Unless fuel costs come back down to earth ($40/barrel or lower), the entire cost and revenue equation will still have to be changed. Right now, there are simply no good solutions - even if other airlines fail.
WorldTraveler
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Titan,
I believe you are partially right. The legacy airlines do have to get their costs down and in an ironic sort of way they will be better able to compete w/ the LCCs than ever because of the relentless barrage of revenue losses and cost increases. However, the LCCs have an aweful lot of capacity coming on line in the next couple years. They don't have any better place to put that capacity and make money than do the legacies; in the absence of any legacy failures, the business model of the LCCs will falter because they will find a harder time making the money they have in the past. Delta's fare restructuring made new opportunities alot less attractive for LCCs (didn't eliminate the gap) and as legacies continue to get costs down, the non-fuel cost difference will become smaller and smaller. On the other hand, eliminating unsustainable legacy capacity will allow LCCs to replace some of that lost capacity instead of fight it out w/ the legacies that are not willing to give up any more market share to LCCs.
I believe you are partially right. The legacy airlines do have to get their costs down and in an ironic sort of way they will be better able to compete w/ the LCCs than ever because of the relentless barrage of revenue losses and cost increases. However, the LCCs have an aweful lot of capacity coming on line in the next couple years. They don't have any better place to put that capacity and make money than do the legacies; in the absence of any legacy failures, the business model of the LCCs will falter because they will find a harder time making the money they have in the past. Delta's fare restructuring made new opportunities alot less attractive for LCCs (didn't eliminate the gap) and as legacies continue to get costs down, the non-fuel cost difference will become smaller and smaller. On the other hand, eliminating unsustainable legacy capacity will allow LCCs to replace some of that lost capacity instead of fight it out w/ the legacies that are not willing to give up any more market share to LCCs.
