I think the chances of this or something similar happening are decent. If oil does not come down and the economy does not rebound, post Labor day travel is going to be brutal for the airlines. Airlines with a mix of older and newer planes at least have the ability to park the older, gas guzzling ones fairly cheaply and rationalize their network capacity.
If the MD80s do get parked without a replacement... AirTran will be doing back flips and saying "I told you so!".... Even though, they themselves did not anticipate 100+ Oil and a big credit crisis. That combo alone has put 3 airlines in chapter 11 bankruptcy and immediate shutdown.... Usually chapter 11 gives airlines an opportunity to restructure and continue to operate. That isn't happening right now and I can see one or two more airlines bitting the dust this year. Times are bad.
If the MD80s do get parked without a replacement... AirTran will be doing back flips and saying "I told you so!".... Even though, they themselves did not anticipate 100+ Oil and a big credit crisis. That combo alone has put 3 airlines in chapter 11 bankruptcy and immediate shutdown.... Usually chapter 11 gives airlines an opportunity to restructure and continue to operate. That isn't happening right now and I can see one or two more airlines bitting the dust this year. Times are bad.
I think Frontier is next. Airtran is posting record traffic, but I don't know if that is turning into profitability. We don't know how Midwest is doing so hard to tell with them. Watch out for Spirit and Sun Country.
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Quote:
Originally Posted by Tim34
I think Frontier is next. Airtran is posting record traffic, but I don't know if that is turning into profitability. We don't know how Midwest is doing so hard to tell with them. Watch out for Spirit and Sun Country.
Frontier should be fine considering that the new management team has refocused the airline around its core strengths in Denver and has cut a lot of fat from the company.
I'd also be very worried about Virgin America. They're bleeding cash badly.
As you said, record traffic levels mean absolutely nothing in the current environment. If fares don't start going up really quick every airline will be losing money operationally.
I think there will be a lot of industry consolidation this year.
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If the MD80s do get parked without a replacement... AirTran will be doing back flips and saying "I told you so!".... Even though, they themselves did not anticipate 100+ Oil and a big credit crisis. That combo alone has put 3 airlines in chapter 11 bankruptcy and immediate shutdown.... Usually chapter 11 gives airlines an opportunity to restructure and continue to operate. That isn't happening right now and I can see one or two more airlines bitting the dust this year. Times are bad.
Air Tran may be saying "I told you so" (and I agreed with them at the time, but still didn't want them to take over YX because I far prefer to YX product to the FL one) but they won't be doing backflips, because if YX ends up parking MD80s things will be pretty bad and FL will be bleeding cash.
The name of the game is revenue and carriers without a diverse or core revenue stream are going to be hurting. And any carrier with a new fleet, while fuel-efficient, is going to lose a lot of money parking planes. Virgin America and Sun Country are probably very close. Frontier, while they have been doing a good job of leveraging their DEN hub, may end up the loser in Denver against UA and WN. jetBlue and AirTran may have the traffic but not the pricing power and may end up in Ch11 which would allow them to downsize and then emerge. Spirit at least has a large Caribbean network to diversify their revenue stream but is probably in the same boat. ExpressJet and Mesa may also not be long for this world.
I have a question hopefully someone could answer.
Why couldn't US companies just buy there gas in Venezula where it costs .14 cents a gallon or Nigeria where gas costs .38 cents a gallon.
I have a question hopefully someone could answer.
Why couldn't US companies just buy there gas in Venezula where it costs .14 cents a gallon or Nigeria where gas costs .38 cents a gallon.
This is just my guess; their demand is a lot less than in the US. If US carriers were to buy gas from there, they would use up their supply in a week.
As we agonize over the cost of fuel for YX MD80's, does anyone know if YX has equipped their MD80's with the "screwdriver" tailcone that reduces fuel consumption? AA, DL, AS, and Allegiant have all applied this feature to their MD80's.
If YX hasn't made this fuel saving modification, maybe they are less concerned about the fuel cost of the plane than we are here on FT.
I have a question hopefully someone could answer.
Why couldn't US companies just buy there gas in Venezula where it costs .14 cents a gallon or Nigeria where gas costs .38 cents a gallon.
Do you mean cut out the middle man and buy directly from the country that produces the Oil? I'm not sure it would work... Nigeria and Venezula use the profits from their oil to subsidize their gasoline. Those prices are artificially low IMHO. I'm not sure if either country can refine all their own oil to make enough gasoline to fuel all their vehicles. Another country is probably refining oil for them and shipping it back. No foreign country is going to subsidize our jet fuel.
