And Boyd says...................

[bluefin]

can't spell, still brewing the joe!

 

[Clyde]

Fuel prices, maybe.

I think the only reason fuel prices are affecting the airline industry right now is because of the huge burden of other debt that they currently have, and I am not referencing labor costs.

Quick expansion, leases, leveraging, and generally poor financial decisions by the chiefs in charge have lead the airlines to be heavily burdened in debt. All of this occuring when the industry was profitable and when fuel was at it's current price back then. As long as nothing burped or sneezed, they were on somewhat stable ground.

Now, start increasing fuel just a little bit, and BANG!! It's like a whole deck of cards starting to fall. Instead of borrowing and expanding aggressively, some of these airlines should have been socking money away for a rainy day and expanded slower.

I think the price of fuel can impact one's bottom line, but I also think it's not as big of a culprit as some of these analysts are saying. I think the bottom line here is that poor financial management by the heads of these airlines put themselves into a financial position where the slightest increase in fuel price leads to an economic downfall for their company.

 

[Rottweiller]

Hey Rottweiler ..........................................let's Swap Avatar's Sometime...................what Da Ya Think?????

NP! Glad to see another who agrees a mans best friends are his Rotty's!!

 

[GogglesPisano]

Fall of Saigon is an understatement.

 

[Mugs]

I have been on several UAL Express flights recently that boarded from the B and C concourse at ORD. I would hope that some of these markets that are just now getting RJ service would at least use those gates rather that the F'd up gates.

 

[Clyde]

Don't underestimate the STILL prevalent over management existing at nearly all the legacy carriers. AA still hase roughly 45 VP's. I have no idea what 45 VP's are needed to accomplish. Evidently, it has something to do with the light bulb question.

Until these airlines can shrink mgmt, I'm firmly against pay cuts for the low level workers. Mgmt in this industry needs to start leading the way. They need to take pay cuts first, then go to labor if necessary (which you know it would be). In nearly all of the latest legacy airline concession packages, mgmt has taken pay cuts only after the unionized employees call them on it. Then all of a sudden you see a 5% cut for VPs and 10% from higher ups. I'm not seeing the same amount of commitment and losing faith in this industry's leadership.

If these airlines could shrink management and streamline things upstairs, they could probably afford to bring pilot salaries back up too.

 

[bvt1151]

Poor Boyd.

Fuel prices aren't the problem, its over capacity. Every airline has to pay the same in fuel (except maybe for SWA with their lucrative hedges) which means all of the industry is on an even keel. So why aren't prices raised to meet the cost? Because there are too many airlines with seats available looking for that ever-elusive, but always sought after market share.

If everybody's costs rise the same amount, it shouldn't be a drag on the whole industry, unless of course there's way too much supply.

I'm still not buying into Boyd's one-sighted "my hindsight was 20-10" crap.

 

[FDJ2]

Every airline has to pay the same in fuel (except maybe for SWA with their lucrative hedges) which means all of the industry is on an even keel.

Not necessarily. Airlines have different levels of fuel hedging, starting with 0 and on up, and their fuel might be hedged at different prices. Also, not all aircraft burn the same amount of fuel per ASM and even the same type and model aircraft will have different fuel burn per ASM depending on stage length. Put in a difference in the price of fuel at different airports and the fact that some airlines have their fuel purchased for them by their mainline partner and you ultimately end up with various degrees of exposure to rising fuel costs depending on your hedge, airframe, stage length, points of purchase and whether or not your fuel is purchased by others for you.

That's not to say that there isn't also an issue of over capacity, but the rise in fuel costs has had a major effect on the bottom line of most carriers and that effect can vary.

 

[Beer&Brauts]

Now if Boyd would just come out to Dulles and the G (as in Ghetto) Concourse the F gates in ORD wouldn't seem so bad!

 

[Big Duke Six]

It's a combination....

First, his comment about the Fall of Saigon re-enactment was one of the funniest things I've ever read here. Also, the "customer service standard" line HAD to be sarcastic.

Anyway, at F9 they tell us that for every penny increase in fuel price, our costs go up something like $1.5 million per year. Considering how much fuel price has gone up, I think one is safe to deduce that we would have been profitable if fuel had not gone up. Now spread that over the entire industry, keeping in mind we use but a fraction of the fuel that UAL does, and I think one can argue it does play a big role in the bleeding.

Realize that industry-wide, profit margins were not that large to begin with. Most carriers are screwed because of their inability to pass cost increases on to the customer due to the aforementioned surplus of seats. Why UAL is still charging BELOW market rates is still a mystery. You would think that they would raise prices as much as possible and still be below the competition. But they don't; some of their prices are WAY low. But hey, who am I?