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Old Oct 20, 08, 1:55 pm
MiamiAirport Formerly NY George
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Join Date: Sep 2006
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Originally Posted by FWAAA View Post
$70/bbl to $80/bbl oil prices may still be higher than the level that allows AA to be profitable under its current model. It's even worse when you consider than oil's fall from $147 to its current price of about half that has been accompanied (maybe even caused by) an impending worldwide slowdown in economic activity. AA's facing a very bleak winter, as are all six (soon to be five) US legacy airlines.

What I find curious is that oil recently fell from historic highs to merely expensive levels (when compared to prices for the last couple of decades) - airline losses are rolling in - and posters are demanding that fuel surcharges be dropped or reduced immediately. Doesn't matter that oil could rise again in the next few months or that airline revenue is heading into the toilet - they want immediate gratification NOW!

If oil had fallen to $30/bbl a year or two ago and airlines were awash in billions of dollars of profits, then I could understand the urgent demands for surcharge reduction. But it's only been a few weeks, people.
Also, OPEC is looking at cutting production to get prices stable and there are a number of unfriendly US oil producing countries (Iran, Venezuela) that want to get oil back to $100.
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