Check the table for forecasts
 

http://businesstravelcoalition.com/c...sis_report.pdf

"AirlineForecasts concludes that if oil prices stay anywhere near $130/barrel, all major legacy airlines will be in default on various debt covenants by the end of 2008 or early 2009. The implication is that several large and small airlines will ultimately end up in bankruptcy, and of those, some will be forced to liquidate."

According to their data, NW and DL are the "least vulnerable" to $132 barrel oil prices. I don't know their methodology.

I didn't read the PDF in detail but you have to wonder if NW is 'safer' because they own so many of their planes and thus don't have lease payments to make on them?

Also, surprised to see CO that far down on the list. Wonder what, if anything, their position means to the longevity of CO.

-RM

The report subtitle? 'Let's Be Alarmist and Seek Government Support.'

Liquidity is the new catch phrase.

Thanks RT for the interesting article.

Yeah, exactly. Of course airlines are important - and of course high fuel prices mean high prices for air travel, which means we need less of them than before, just as for any other industry. If wages go up, I'll raise my prices a little, shrink a little, and invest in substitutes (like machines). If the price of air travel goes up, and I'm a business, I'll put my prices up a bit, sell a bit less (since part of my production cost went up), and invest in substitutes (like IT and like producing nearer home so I don't need to travel so much). And if I'm a leisure traveler, I'll fly less. Both of those mean less flying, which means we need fewer airlines, or else all airlines shrinking. We're seeing that happening now. It's a tough adjustment process if you have investments (capital or skills) in the airline industry, but not a call for government intervention at all. What additional benefit would be obtained by government intervention? Well, the airline industry (owners, managers, and workers) would benefit at the expense of taxpayers, and we'd have inefficiently little shrinkage in the industry. If you're in the industry, you'd probably like that idea. Everyone else, not so much.