USA Today front cover on the AVIATION industry (repost)

[Wesb737fo]

yeah but you are a pilot....normal people will continue to fly IMO. Pilots are afraid of the economy because all we read is the usa today.

That's quite an assumption to think we all hang on every word in the USA today. How about the Wall Street Journal? I've known pilots to read that?(myself included). So where do you get information? What about Forbes? Time? Newsweek? CNBC?

Anyway, I also think that the USA today is merely Fast Food media, but that isn't the point. Alot of people think that oil will go higher. Just how high and for how long we don't know.

I'm not sitting around clinching my teeth wondering what I'm going to do when and if it does top 150. I just hope that it doesn't, but I will adjust if it does.

 

[Lear70]

I know we are in a recession. I am not worried about it because i have set my life to be basically recession proof. My mortgage is very low because I did not go out and buy the massive house that I could only afford if I got creative financing. I sold another house near the top of the market and put the money in the bank. If neither my wife or I could work we could last for over 3 years on just our savings alone. Both of us have cars that are paid for, no credit card debt, in fact no debt except for the mortgage every month. And yes I read other papers than the usa today...but many pilots dont. However, I still think people will continue to fly, probably not in the numbers we see today, but what is the point of running a biz if you sell you product at less than it costs to produce. I have very little sympathy for people that spend every dollar as soon as it hits their bank account. Kind of like our government....

I think we're basically on the same page... I know many people will still fly (most of them, probably), but that 10-15% hit (guestimate) of leisure travel falloff along with $120+ oil is going to hurt. Not necessarily end airlines (although a couple will probably file for reorganization), but it's going to get uncomfortable if you've been hired anywhere in the last 2 years, especially if you're an RJ guy/gal.

I'm still working on making our home recession-proof. Used my tax refund to pay off the last of the credit cards I ran up while I was jobless and in training at Kalitta, waiting for the "rebate" check to hit and use it for the vacation along with the cash I have saved for that purpose.

My car is paid for, but the wife's isn't and I still have a student loan, but a low mortgage payment helps. If I had to work my 2 side businesses, as long as the wife still had her job at the hospital that brings us medical bennies and pays the car insurance, we'd be OK. Wish she had a degree and could go do medical sales... with a little polish she'd be perfect at it - a natural salesperson with the gift of gab, then I could stay home and just be "baby Daddy".

 

[Wesb737fo]

I'm still working on making our home recession-proof. Used my tax refund to pay off the last of the credit cards I ran up while I was jobless and in training at Kalitta, waiting for the "rebate" check to hit and use it for the vacation along with the cash I have saved for that purpose.

you and skypine are right about trying to recession-proof. I just finished paying off the credit cards and have about 10 months left on the car. I didn't buy out my comfort zone, so the mortage is low. I have about 6 months of cash on hand (trying to build that up higher). Not sure what to do with the rebate other than add it to the reserve, but a mini-vacation sounds like a good idea. Maybe an Alaskan cruise.....

 

[snow-back]

Here's where your major revenue has gone.

http://www.aviationweek.com/aw/gene...urges For New Gulfstream Bizjet&channel=busav

Gulfstream Aerospace generated a tsunami of market interest for its recently announced Gulfstream G650 business jet and officials are now sorting through letters of intent representing potential orders for hundreds of the $60 million aircraft, the chairman of Gulfstream parent General Dynamics told financial analysts Wednesday.
The Savannah, Ga. manufacturer announced plans last month to build the largest nonairliner business jet in the market, an aircraft with an array of sophisticated electronic systems for use by pilots and passengers. The G650, in addition to offering the largest cabin among conventional business jets, will have a maximum operating speed of .925 Mach and be capable of nonstop flights of up to 7,000 nautical miles at speeds of .85 Mach (BA, March 17/118). Units slated for delivery in 2012 carry a price of $58.5 million. That price will rise to $59.5 million for deliveries the following year.
Nicholas Chabraja, GD chairman and CEO, offered a low-key response to an initial question from analysts about the G650, saying the new airplane was "well received" in the marketplace. But he soon acknowledged that the number of potential orders received to date has far exceeded the most optimistic projections of company officials. Gulfstream started taking letters of intent for the G650 from potential customers immediately after the March 13 announcement, but it did not begin accepting refundable deposits of $500,000 until April 15. As of April 23, the company had received "what some might call an overwhelming response," Chabraja said. While he did not mention a specific number, analysts said Gulfstream has received letters of intent representing some 500 G650s, and Chabraja's comments suggest that estimate is accurate.
Despite the magnitude of building and certifying an all-new, clean-sheet-of-paper airplane, Gulfstream said in March it expects to begin delivering G650s in 2012, just more than four years from now. Chabraja said Wednesday that Gulfstream plans to deliver 17 G650s in 2012, and a combined 66 more in 2013 and 2014, for a total of 83 aircraft in the first two and one-half years of production. But the initial market response indicates there is demand for six to seven times that many G650s, Chabraja said, which would equate to somewhere between 498 and 581 aircraft. "So we'll see how all that shakes out," Chabraja added.
The GD chairman acknowledged that "our initial production planning is inconsistent with the demand" for the G650. "We'll have to replan and pulse our supply chain and take them kicking and screaming" if Gulfstream decides to significantly ramp up initial production, Chabraja said, adding, "It's going to be a successful program for everyone." He told analysts during Wednesday's conference call that "We're at the very early stages of dealing with demand we didn't anticipate."
When launching new aircraft programs in the past, Gulfstream traditionally offered delivery positions for the new model to its existing customer base first. In the case of the G650, officials said there were presentations made to about 100 potential customers after the March 13 program launch announcement. But, because the G650 is an entirely new airplane and not just an extension of an existing model line, the decision was made to accept letters of intent (LOI) from any qualified buyers. The $500,000 refundable deposits were transmitted to a bank designated by Gulfstream and delivery positions were assigned to each LOI signee on a first-come, first-served basis, depending on the precise time the deposit was received and logged by the bank.
That has upset some customers who found themselves with tentative aircraft deliveries scheduled years into the future. "A lot of very good friends, [including] friends of mine, are very unhappy about their position in the queue," Chabraja told the financial analysts. "We'll see how it sorts out" and find out "who's for real in the signup process," he added.
Gulfstream contract officials are now contacting LOI signatories to confirm their aircraft delivery positions and determine if the customer is still interested in proceeding. If so, a contract will be negotiated and a schedule of nonrefundable deposits will be established. Asked how large fleet customers are being handled in this process, a spokesman told BA that Gulfstream is trying to satisfy as many individuals as possible before taking care of bulk orders. Customers ordering multiple aircraft are being told they can expect to receive only a limited number of G650s per year.
Major Expansion Under Way
The Savannah, Ga. aircraft manufacturer is two years into a seven-year, $400 million facilities expansion program. One major element of that expansion is a new 306,104-square-foot manufacturing/assembly building where the G650 will be built. The company broke ground on that building just a year ago and it is largely complete, with fixtures and other equipment now being installed. The new building will accommodate two G650 production lines, but original plans called for initially operating just one line - with a capacity of 45 aircraft per year - with the possibility of the second line starting in 2014. The huge market response to the G650 is now causing officials to reconsider those schedules.
Trying to find the right answer on production levels is a complex issue, one that is challenging not only top executives but also specialists in a variety of disciplines including manufacturing, material and engineering, according to a company spokesman. And determining how many aircraft to build depends not only on Gulfstream's production capacity, but also on that of its vendors. "It's not just us," the spokesman said, "it's everything that goes into [the G650]," from engines and avionics to transparencies and landing gear.
A desire to boost production rates to shorten the time from aircraft order to aircraft delivery also must be balanced against the increased costs that a sharper production ramp-up would impose. Ultimately, the company must determine "What is the valid business case?" the spokesman said. While the business jet manufacturing industry is currently enjoying record and unprecedented demand for its products, the Gulfstream spokesman said officials don't want to risk raising production rates to levels that cannot be sustained. He noted it was just five years ago that the company announced one-month furloughs for some 1,000 of its initial-phase manufacturing employees in Savannah because of slowing sales of new aircraft (BA, May 5, 2003/203).

 

[skypine69]

A chick with the gift of gab???!!! how unusual! Good luck to you...I hope that you get the bills paid off soon and can start saving for the rainy day, its a great feeling to not have to worry about every little downturn or piece of bad news.

And yeah I know that many pilots read more than the usa yesterday, but many dont, and thats who I am worried about.

 

[Capi_Cafre']

The article smacks of pre-conditioning the American public .......

Corporate America using the media to shape public perception? Wow, that almost never happens.

 

[AMANSWORLD]

The real issue is very simple our government allows and rewards crappy management. Now is the time Pilots and Unions need to educate the public. As far as politicians go f!@kem. We need to strike as a whole.

I want to know who moved this chat into "non-aviation".

We're talking about the biggest, single change in the face of commercial aviation history since deregulations and 9/11 and you think it's NOT about aviation?

Longhorn, if this was you, I'm going to recommend a reasonable-suspicion drug test to your employer. If it was someone else, you might want to redefine your definition of what is "non-aviation" versus what is "aviation" oriented.

Genius. Now... back to the AVIATION ISSUE

The article smacks of pre-conditioning the American public for upcoming fare increases, giving a lot of good reasons why they have to increase, but it also is alarmist in predicting how much loads are going to fall off without giving a price point at which that will happen.

I can't believe the entire day has gone by and no one has even briefly commented on the USA today front page article regarding oil prices, imminent fare increases and capacity pull-downs, and the result on leisure travel and related travel industry segments (cruises, hotels, etc).

While I think they are being alarmist at just how many people will quit flying, they did make it blatantly obvious that fare increases are coming. The question is, at what price point do you think people will stop flying?

For the leisure traveler? Certainly $10 a piece wouldn't stop them, but would $50? $100? With a family of 4 or 5 going to see the grandparents or going on a Disney Cruise, add $500 plus taxes to the bill and you just blew your spending cash for a couple days once you get to your vacation destination.

For the business traveler? Most of them expense it, but at what point will the manager say the cutoff is for viability of a face-to-face meeting or convention is worth it? $100 increase? $500 increase?

It's an important distinction because the LCC segment that relies so heavily on the leisure traveler and small-business executive, that breaking point becomes life or death for the carrier.

The legacies have, in all likelihood, a different breaking price point, but I can't imagine it's THAT much higher than the LCC's break point.

Although the article did a pi*s-poor job of spelling this out, where do YOU guys think the breaking point is and at what point will we suffer major passenger fall-out?