Got oil?

[crxpilot]

{from planebusiness.com i believe?}

What Happens to Airline Profits As Oil Prices Continue to Rise?

Last week, Merrill Lynch analyst Mike Linenberg plotted the demise of airline profits for 2008, based upon existing hedges and a number of projected potential crude oil prices. Some might argue that Mike didn't take out the exercise far enough, as he stopped at $110 a barrel. But hey, we can still be optimists, can't we?

The airlines compared in the chart are Alaska, American, Continental, Delta, Northwest, United, AirTran, Allegiant, Frontier, JetBlue, Southwest, and US Airways.

With oil at $70 a barrel on average, for the year, all the airlines will post a profit for the year.

With oil at $80 a barrel, on average, Frontier is projected to post a $5 million loss.

With oil at $85 a barrel, on average, Frontier now sports a $20 million loss.

With oil at $90 a barrel on average, Frontier posts a $34 million loss, JetBlue posts a $17 million loss, and American Airlines would post a $204 million loss.

With oil at $95 a barrel, on average, Mike projects that American Airlines will post a $538 million loss, Delta will post a $100 million loss, Continental will post a $12 million loss, United will post a $116 million loss, AirTran will post a $27 million loss, Frontier will post a $48 million loss, and JetBlue will post a $45 million loss.

At an average cost of $95 a barrel, only Alaska, Northwest, Allegiant, US Airways, and Southwest will post a profit.

Now, here's the kicker.

If we were, heaven forbid, to see an average price of $110 for oil this year, only two airlines would still post a profit, according to Mike's calculations. One? Southwest Airlines. The airline would still post a $445 million profit for the year.

That's startling enough.

But so is the other airline that would still be profitable.

That airline? The one that flies all MD-80s. Allegiant. According to Mike's projections, the airline would still manage to post a profit of $3 million for the year. With oil at $110 a barrel.

And yes, as someone pointed out this week, Mike obviously is not factoring in any defensive "moves" any of the airlines might make to mitigate rising fuel prices.

 

[cargoflyr69]

At an average cost of $95 a barrel, only Alaska, Northwest, Allegiant, US Airways, and Southwest will post a profit.

Now, here's the kicker.

If we were, heaven forbid, to see an average price of $110 for oil this year, only two airlines would still post a profit, according to Mike's calculations. One? Southwest Airlines. The airline would still post a $445 million profit for the year.

That's startling enough.

But so is the other airline that would still be profitable.

That airline? The one that flies all MD-80s. Allegiant. According to Mike's projections, the airline would still manage to post a profit of $3 million for the year. With oil at $110 a barrel.

I guess we had better add Northwest as number 3 to make a profit then.

when NWA exited ch11 they were basing the business plan on roughly 100/bbl oil.

To top that off last fall they hedged in the mid 80's/bbl for a perioid of 2 years.

 

[spg2bmd]

Dont forget the regionals, they dont pay for fuel. They just get gas.