US Airways delays A350 deliveries

[aredeeyou22]

Jet fuel is < than $2 per gallon, as of today. It its time to get on with Asia expantion...that is if LCC really plans on doing it. Was not fuel the excuse used to delay the start-up of China service?

Just start expanding, overnight? Isn't the problem the volatility of the price of oil? I keep reading that it could spike/ fall at any moment. Major expansion and retraction of surcharges/ fees seems premature at this point.

 

[FlyDCJets]

Am I the only one to notice this morsel? How many 332's were scheduled for 2009? I thought only 3. If true, then how will TLV be served?

The two A330-200's are the former Swiss ILFC aircraft that we declined to lease.
We are scheduled for 3 A330-200's directly from Airbus May, July, and Septmber 2009.

 

[FlyDCJets]

Let's be perfectly honest with one another. Does anybody on these boards truly believe LCC will even be flying come 2015?

Arm chair financial anlaysis is just an hypothetical assumption.
Given the current world economic conditions there is no guarantee that "D" will be around either.

 

[autofixer]

Just start expanding, overnight? Isn't the problem the volatility of the price of oil? I keep reading that it could spike/ fall at any moment. Major expansion and retraction of surcharges/ fees seems premature at this point.


That is what hedging is for. They should be hedging like crazy at these levels, for as far out into the future as is possible. Major expansion may seem premature if you look at things from a typical LCC management view; however, now is the time to pounce and grab for new markets and that all too elusive market share. JMHO. That being said, I am very confident that LCC management will do exactly nothing and miss a golden, once in a lifetime opportunity.

 

[aredeeyou22]

Why should they be hedging like crazy? What airline is hedging like crazy at this point, given the recent major drop in price? Many airlines are probably wishing they didn't hedge so much.....

I would think the current market volatility makes any major expansion risky.

 

[FWAAA]

Hedging right now far into the future might be the right thing to do, if oil goes higher and stays there long-term.

In 1998 and 1999, following the Asian meltdown, oil slid to $10-$12/bbl and bounced around below $20 for two years. What if the current pending world-wide recession causes a repeat? Do you really want to be paying $60/bbl while everyone else pays $10/bbl or $20/bbl or $30/bbl?

History has shown that oil goes up and then oil goes down. Often, the ups are short-lived and the downs last for decades. Check the worldwide oil prices since 1973 and chart how few periods are expensive and how many periods are dirt cheap by comparison. Maybe we're in for 10-20 years of really expensive oil. If history is any guide, that's extremely unlikely. But if you feel differently, feel free to buy all the gasoline futures you can afford right now. Maybe you'll end up rich. And then again, maybe not.

 

[aredeeyou22]

Maybe you'll end up rich. And then again, maybe not.

Agreed. As I have said, the volatility seems to be a great risk.

 

[flybynite]

Why should they be hedging like crazy? What airline is hedging like crazy at this point, given the recent major drop in price? Many airlines are probably wishing they didn't hedge so much.....

I would think the current market volatility makes any major expansion risky.

Well, if you've been reading the news paper....OPEC just called an emergency meeting this last week. They want to cut capacity to keep the price up. To be more specific...Iran and Venezuela want it up around $90 a barrel so they can pay their bills. They are in the hole. Oh, well.

Yeah...we should be hedging.

 

[nycbusdriver]

Let's be perfectly honest with one another. Does anybody on these boards truly believe LCC will even be flying come 2015?

Let's really be perfectly honest here.

USAirways has been written off as dead so many times in the last 15 years it's almost comical. Continental vowed to push US into the ocean in the 1990's. Delta was so confident in our sure demise that they planned their business becoming profitable around it (and later declared bankruptcy mostly because we didn't oblige them...did you forget that tidbit.) Even SWA abandoned their usual tactic of avoiding fortress hubs to get their foot in PHL (before Jet Blue) figuring that they would have free-run once USAirways went belly up. (Oddly here, the airline that got pushed out of the SWA concourse was Delta...and we are now told that Delta is about to be pushed out of A-East.) Countless analysts have pronounced us dead during that time period. And, quite honestly, I am still amazed that we didn't liquidate on January 16, 2005.

I suspect this airline will be flying in one form or another well past 2015.

Mark Twain said it best: "The rumors of my death have been greatly exaggerated."

 

[jcw]

That is what hedging is for. They should be hedging like crazy at these levels, for as far out into the future as is possible. Major expansion may seem premature if you look at things from a typical LCC management view; however, now is the time to pounce and grab for new markets and that all too elusive market share. JMHO. That being said, I am very confident that LCC management will do exactly nothing and miss a golden, once in a lifetime opportunity.


Hedging is based upon what the markets predict the price will be in the future not the price it is traded at today. It's a bet at the casino table.

 

[flybynite]

If the markets had been behaving in a normal manner, the price of a barrel of oil should have been around $65 to $70 a barrel. The speculators went nuts and pushed it well beyond it's true value.

Now that it's down to where it should be....we should be hedging as much as possible.

And a lot of the reason the oil prices finally dropped is because of the American public. We put the skids on. We yanked back on our consumption. We should give ourselves a high five on this.

But it's not over. We don't own the oil we use so we'll never be in control. Yet we can control how we use our energy and look for and use alternatives.

 

[autofixer]

We are near the production cost of oil now. It will go up. There is not a product in the world that sells at production costs forever. Oil may not go to $140, yet, but you can write book on $80-$90 per barrel. I guess we will all be amazed at SWA in a year or two, at how they hedged at $65 and how they have a competetive advantage over LCC and "just wait until their hedges run out in 5 years...". LCC should be hedging (speculating) at $65 into eternity. This is one of those once in a decade opportunities handed to LCC on a silver platter. But I guess if you don't plan to be around in 5 years, why bother? It makes you wonder.

The reason oil dropped 50%, as did gold 30%, is that hedge funds had to liquidate their profitable assets (oil and gold instruments) to cover redemptions. Sure, there was some demand destruction there, but 50%? I don't think so. Watch and be amazed as oil rises again. I am betting on it. JMHO.

Let's hedge and get on with China!

 

[oldcrow]

Fuel hedging is cash only I think. No credit cards allowed.

 

[FutureUScapt]

LCC should be hedging (speculating) at $65 into eternity. This is one of those once in a decade opportunities handed to LCC on a silver platter. But I guess if you don't plan to be around in 5 years, why bother? It makes you wonder.

If only it were that simple. US (and most airlines for that matter) don't have the credit rating needed to hedge that far into the future.

 

[BoeingBoy]

Fuel hedging is cash only I think. No credit cards allowed.

Unless you've got good credit - like WN.

Jim