This is why this SLI is so important. There will be furloughs. DAL has disproportionately exposed itself to the international market, gambing that this was
the place to make money during a sluggish economy. A hedge, if you will. However, like most hedges, they can really bite you in the a$$ if you bet the wrong way. Apparently one of the "genius" managers the General trumpets here so often didn't count on a global slowdown - as if the rest of the world was insulated from US market conditions.
Look at the following article and notice 3 important things.
1. Africa traffic is getting hit hard (DAL expansion area)
2. Asia traffic is getting hit hard (NWA exposure)
3. North American traffic growing (DAL and NWA making large cutbacks)
DAL is making all the wrong moves. So much for the "managerial genius" of Dick Anderson.
__________________________________________________________________________
Passenger traffic drops worldwide for the first time since 2003
By TREBOR BANSTETTER
[email protected]
function PopupPic(sPicURL, sHeight, sWidth) { window.open( "http://media.star-telegram.com/popup.html?"+sPicURL, "", "resizable=1,HEIGHT=" +sHeight+ ",WIDTH=" +sWidth); } Passenger traffic on airlines worldwide shrunk last month, the first such decline in five years and another sign of the rapidly slowing economy.
Overall traffic dropped nearly 3 percent in September compared with a year earlier, according to the International Air Transport Association, an industry trade group. It was the first time traffic declined since the SARS outbreak in 2003, which resulted in greatly reduced travel to Asia.
"The deterioration in traffic is alarmingly fast-paced and widespread," said Giovanni Bisignani, chief executive of the Geneva-based group.
The largest drop came in Africa, where traffic fell nearly 8 percent. Traffic in North America declined by about 1 percent, according to the group.
The only region to see growth in September was Latin America, where traffic increased about 2 percent. But even that was well below the 12 percent growth in Latin American traffic in August.
Bisignani said the global airline industry could lose more than $5.2 billion this year, driven by high fuel prices during the first half of the year and the current slowdown in traffic.
"Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand," he said.
In North America, traffic had grown steadily at about 5 percent this year through August, according to the group. The month also saw a 3 percent decline among Middle Eastern airlines, which had enjoyed double-digit growth for several years.
The decline comes amid some optimism for U.S. carriers. Several analysts are predicting a profit for the industry next year despite the anticipated drop in traffic, largely due to falling fuel prices, higher fares and new passenger fees.
Airline shares dropped Friday amid the market sell-off. Fort Worth-based AMR Corp. (ticker:
AMR), the parent company of American Airlines, fell 53 cents, or 5.7 percent, to close at $8.80 a share. Southwest Airlines (
LUV), based in Dallas, fell 89 cents to close at $10.97, a 7.5 percent drop.
Traffic decline Airline passenger traffic slipped worldwide in September in every region except Latin America.
RegionTraffic growth (decline)Africa(7.8%)Asia(6.8%)Europe(0.5%)Latin America1.7%Middle East(2.8%)North America(0.9%)Worldwide(2.9%)Source: International Air Transport Association