Cruz speaks: "this is worse than 9/11"
Mar 14, 2020, 8:50 am
#91
Join Date: Nov 2017
Posts: 3,061
They could've deferred paying out dividends. LH is allegedly thinking about that. I'd argue, however, that more than 50% of their costs are variable. Fuel, overflight, landing fees, shift pay/flight allowances, and I'd think they'd be able to defer some of the leasing cost and other discretionary expenses.
Mar 14, 2020, 8:51 am
#92
Join Date: Aug 2002
Location: YYZ
Programs: BA Gold/Marriott Gold/HH Diamond/IC Plat Amba
Posts: 5,992
Perhaps BA could concentrate a bit on their almost taken for granted Canadian destinations. Still basically wide open to travel to here from everywhere and it would probably take a threat from the US to close the US Canada border for the Liberal government to change that. So if people still want a North American vacation lots to do here. Of course if entering through YYZ you would have to go through the horror of the immigration hall where like yesterday you have 2000+ people from every corner of the world packed in like sardines endlessly queuing through tensa barrier lanes despite government guidances to not have people rammed into indoor spaces
Mar 14, 2020, 9:18 am
#93
Join Date: Apr 2018
Location: London
Programs: BA Silver (for now)
Posts: 1,000
In my view, this makes it a lot worse. It reads like its intended audience is the shareholders - it is very deadpan and cold.
I'd have expected an internal memo to be a heck of a lot more empathetic than that and at least consider the impact this is having on its staff.
I'd have expected an internal memo to be a heck of a lot more empathetic than that and at least consider the impact this is having on its staff.
Mar 14, 2020, 9:30 am
#95
Join Date: Aug 2016
Location: United Kingdom
Programs: BAEC Blue, Flying Blue Silver, Hilton Gold, Marriot Gold
Posts: 817
Mar 14, 2020, 9:31 am
#96
Join Date: Jul 2012
Location: London
Posts: 489
They could've deferred paying out dividends. LH is allegedly thinking about that. I'd argue, however, that more than 50% of their costs are variable. Fuel, overflight, landing fees, shift pay/flight allowances, and I'd think they'd be able to defer some of the leasing cost and other discretionary expenses.
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Mar 14, 2020, 9:40 am
#97
A FlyerTalk Posting Legend
Join Date: Aug 2006
Location: Argentina
Posts: 40,211
Here's hoping it doesn't become a regular event or air fares will be extortionate!!
Mar 14, 2020, 9:40 am
#98
Join Date: Aug 2016
Location: United Kingdom
Programs: BAEC Blue, Flying Blue Silver, Hilton Gold, Marriot Gold
Posts: 817
Mar 14, 2020, 9:59 am
#99
Join Date: May 2014
Posts: 7,237
Going out on a tangent, those prices are an anomaly... but I suppose that when, eventually, things will settle down there'll be a lot of low fares going out in order to start filling planes up and get cash flowing again.
Mar 14, 2020, 10:05 am
#100
Join Date: Feb 2016
Posts: 947
I think a lot of leasing and fuel hedging would have a force majeure clause in it. I wouldn't be surprised if a lot of the legal bods at BA/IAG are going through these in great detail.
Mar 14, 2020, 10:11 am
#101
Join Date: Jul 2012
Location: London
Posts: 489
I'm not an expert on actual jet fuel, but in my limited experience with red diesel for the ground service equipment, we were billed monthly by Airport Energy based on how much the bowser had to fill in the tanks over by the EAA (Terminal 5D). Price per litre was decided previously as you said, but the fuel was billed based on utilisation.
- Fuel - i fill up my plane, and pay the current price
- Hedging - i enter a contract with someone to buy 90% of this year's fuel at $50 a barrel
- the fuel price drops to $30, so at the end of the year I have to pay the counterparty $20 * volume for 90% of original planned flying
Mar 14, 2020, 10:15 am
#102
Join Date: May 2014
Posts: 7,237
Think of the hedging and fuel bill as two separate things:
- Fuel - i fill up my plane, and pay the current price
- Hedging - i enter a contract with someone to buy 90% of this year's fuel at $50 a barrel
- the fuel price drops to $30, so at the end of the year I have to pay the counterparty $20 * volume for 90% of original planned flying
Mar 14, 2020, 10:31 am
#103
Join Date: Feb 2011
Programs: BA blue,, aeroplan 25K
Posts: 1,028
I imagine however that domestic travel is faring a lot better than overseas.[/QUOTE]
likely for nearly every country as so much international travel has been either banned or curtailed
most work environments in NA have banned international travel not just for work related but leisure travel. My workplace has not only banned international but also to the USA and they are talking about local domestic travel also.
i think Europe and NA have just started to see the implications and no one really knows where it’s going but travel will only get more and more curtailed over the next several weeks. I just hope it settles down the mortality is lower than predictions are suggesting and we all get back to where we were:
likely for nearly every country as so much international travel has been either banned or curtailed
most work environments in NA have banned international travel not just for work related but leisure travel. My workplace has not only banned international but also to the USA and they are talking about local domestic travel also.
i think Europe and NA have just started to see the implications and no one really knows where it’s going but travel will only get more and more curtailed over the next several weeks. I just hope it settles down the mortality is lower than predictions are suggesting and we all get back to where we were:
Mar 14, 2020, 10:44 am
#104
Join Date: Jul 2012
Location: London
Posts: 489
On Jan 2nd, Coronavirus strikes and i cut 70% of flights for the remainder of the year. At the same time, oil price drops to $30 a ton. So my fuel costs for the year are:
- 30% of flights = 300 tons @ $30 a ton = $9000(if i didn't hedge, this would be my total fuel bill)
- 900 tons hedging loss @ $20 a ton = $18000 < this is the additional cost that airlines face if heavily hedged. You can see that if the oil price went up to $70, there would be a hedging gain of $18000 or if it stayed at $50, then no money would change hands