The Global credit situation has tied up most sources of funds for a variety of business (and personal) credit purposes. Companies may not be able to secure funds to meet payrolls and pay for supplies. Already, AIG (parent of International Lease Finance Corp) has closed and many large banks are being merged into other banks.
Iceland is experiencing credit issues and has just borrowed $5.5 billion from Russia, after being turned down by Britain and European nations. An Icelandic financial writer reports that "We've been living on cheap credit for some time now and the time has come to face the issue." An Icelandic freight company has ordered several 747-8 freighters (or were they 777 freighters); given the current credit situation will these orders be filled and paid for?
Other airlines have gone on new aircraft buying binges and since many planes are either purchased with borrowed funds or leased (another form of credit); I wonder how many Airbus or Boeing orders might be in jeopardy. I'm sure we haven't heard much about this yet, but we will.
Global Credit Crunch - Possible Effects
Moderator: Latest news team
-
smokejumper
- Posts: 1033
- Joined: 21 Oct 2005, 00:00
- Location: Northern Virginia USA
Re: Global Credit Crunch - Possible Effects
First thing to say: Loans is the way banks makes money. They get money from deposits and makes loans to borrowers. They make a profit on the interest rate. So loans will still be allowed to companies or individuals.
Currently they have big issues with some high risk debts (sub primes) that the borrowers can not repay. Banks have always loans that can not be repaid but usually the good loans profits cover this loss.
This is important as they don't own the money the lend.
Due to the current situation of the finance market they need stability with loans they allow to Quality borrowers to get confidence of their shareholders and their deposit clients.
The main effect we already see is that credit conditions are more strict than before for people who borrow e.g for an house. Planes are not different and changes will happen on two points:
1) Big companies likes Lufthansa or companies with strong shareholders will have even more facility to finances aircraft as they are "quality borrowers" compared to smaller companies.
2) Loans for assets other than aircrafts or financing line to cover temporary treasury difficulties will be even more difficult to get or even impossible. Why ? Because aircraft can be sold to repay the loan. As aviation is a growing world market it is possible to sell aircraft to another company in a reasonable time.
We have already seen the consequences to theses two points since 2007: Skybus, Silverjet, Eos, ZOOM,... Financing was already rare and difficult to find.
We can expect more bankrupts companies in the following month not due to the oil price but to the Money price.
Currently they have big issues with some high risk debts (sub primes) that the borrowers can not repay. Banks have always loans that can not be repaid but usually the good loans profits cover this loss.
This is important as they don't own the money the lend.
Due to the current situation of the finance market they need stability with loans they allow to Quality borrowers to get confidence of their shareholders and their deposit clients.
The main effect we already see is that credit conditions are more strict than before for people who borrow e.g for an house. Planes are not different and changes will happen on two points:
1) Big companies likes Lufthansa or companies with strong shareholders will have even more facility to finances aircraft as they are "quality borrowers" compared to smaller companies.
2) Loans for assets other than aircrafts or financing line to cover temporary treasury difficulties will be even more difficult to get or even impossible. Why ? Because aircraft can be sold to repay the loan. As aviation is a growing world market it is possible to sell aircraft to another company in a reasonable time.
We have already seen the consequences to theses two points since 2007: Skybus, Silverjet, Eos, ZOOM,... Financing was already rare and difficult to find.
We can expect more bankrupts companies in the following month not due to the oil price but to the Money price.
Gate A1 : Blog avion passion
-
TCAS_climb
- Posts: 413
- Joined: 04 Jan 2004, 00:00
Re: Global Credit Crunch - Possible Effects
When banks lose 1$ on crappy investments they withdraw 10$ from their big pot of money available for loans (this data is the result of a Goldman-Sachs study).
This means that it's more difficult (i.e. there's less "borrowable" money available, criteria are tougher) and more expensive to get a loan now (i.e. interest rates going up because banks have lost a lot)... If you manage to get one !
Since banks remain the primary mean of credit and investment, any company trying to finance a new project or to get a bubble of oxygen to survive will have a hard time doing it.
Ever seen dominos falling ? Our industry is number 4 in line. Please ensure that your seatbelt is fastened, etc.
This means that it's more difficult (i.e. there's less "borrowable" money available, criteria are tougher) and more expensive to get a loan now (i.e. interest rates going up because banks have lost a lot)... If you manage to get one !
Since banks remain the primary mean of credit and investment, any company trying to finance a new project or to get a bubble of oxygen to survive will have a hard time doing it.
Ever seen dominos falling ? Our industry is number 4 in line. Please ensure that your seatbelt is fastened, etc.
Re: Global Credit Crunch - Possible Effects
My 2 cents?
The next logical step for banks is that they will want to reduce the risk they run, when they grant loans. For the airlines, this means that they will need to prove their credit worthiness to a further extent and the conditions to get a loan will get more severe. Yet, this effect will probably only affect the growth plans of the different carriers instead of the bottom-line.
Nevertheless, this does not mean that airlines will not feel the credit crunch…on the contrary! The economic slowdown which is becoming a fact in the coming weeks (IMF adjusted it’s prediction of World Wide GDP growth from 3,9% to 3,1% and the trend is that adjustments are made downward) will probably influence passenger numbers in the negative sense. It probably means a further partial transfer from business to economy for business travelers and cancellation of holiday plans for end-customers.
A positive side-effect of the downturn is the decline of the price per barrel for oil. Yet, nobody can estimate the evolution of oil-prices for the coming winter.
As a conclusion, I think that a few of the weaker carriers will not survive the crisis, while others will take measures to reduce the negative impact of the economic downturn. Examples of measures are a slowdown of strategic growth plans, not renewing fixed-duration contracts, etc. As a last resort, I think for some carriers lay-offs will not be evitable.
Then there is still the training environment. I fear that the demand for ab-initio pilots will take an even further hit as the gap between the natural outflow of pilots who retire and the pool of experienced pilots available on the market narrows further. Does anybody have a clue as to how many ab-initio pilots will graduate this year? SFA waves off a few proms (2?) of pilots per year, BAFA’s classes are full during the day, the evening and the weekend, OAC also graduates a pool of pilots per year, etc. I fear that the waiting cues on the “wervingsreserves” will become even longer in the coming years…
Best regards,
bAIR
P.S: despite the very negative picture I am drafting hereabove, I must admit I am seriously thinking about starting my own ATPL training. Yet, I am thinking about postponing it another year or two, given the current developments
The next logical step for banks is that they will want to reduce the risk they run, when they grant loans. For the airlines, this means that they will need to prove their credit worthiness to a further extent and the conditions to get a loan will get more severe. Yet, this effect will probably only affect the growth plans of the different carriers instead of the bottom-line.
Nevertheless, this does not mean that airlines will not feel the credit crunch…on the contrary! The economic slowdown which is becoming a fact in the coming weeks (IMF adjusted it’s prediction of World Wide GDP growth from 3,9% to 3,1% and the trend is that adjustments are made downward) will probably influence passenger numbers in the negative sense. It probably means a further partial transfer from business to economy for business travelers and cancellation of holiday plans for end-customers.
A positive side-effect of the downturn is the decline of the price per barrel for oil. Yet, nobody can estimate the evolution of oil-prices for the coming winter.
As a conclusion, I think that a few of the weaker carriers will not survive the crisis, while others will take measures to reduce the negative impact of the economic downturn. Examples of measures are a slowdown of strategic growth plans, not renewing fixed-duration contracts, etc. As a last resort, I think for some carriers lay-offs will not be evitable.
Then there is still the training environment. I fear that the demand for ab-initio pilots will take an even further hit as the gap between the natural outflow of pilots who retire and the pool of experienced pilots available on the market narrows further. Does anybody have a clue as to how many ab-initio pilots will graduate this year? SFA waves off a few proms (2?) of pilots per year, BAFA’s classes are full during the day, the evening and the weekend, OAC also graduates a pool of pilots per year, etc. I fear that the waiting cues on the “wervingsreserves” will become even longer in the coming years…
Best regards,
bAIR
P.S: despite the very negative picture I am drafting hereabove, I must admit I am seriously thinking about starting my own ATPL training. Yet, I am thinking about postponing it another year or two, given the current developments
Re: Global Credit Crunch - Possible Effects
We will see many new initiatives such as new metods of selling airplanes ( sell and lease back ), new kind of maintenance contracts, sharp prices ( getting rid off airmiles )
In some sectors, there are already contracts where the customer doesn't pay for the machine he uses. In this case he would buy flying time hours. It is a mix of leasing and maintenance contracts. And very short time based, very competitive. Just as you need a van for 1 day .
It could also open the door to end the distinction between regular flights and charter flights.
It will demand flexability of the personel, but also from politicians, law makers, unions.
It doesn't mean that LCC's with their standarised fleets will automatically will make more profit. With more flexability, a full service company could more easely change the kind of airplane -even from another company, just hours before departure, depending on the load factor. The LCC's will be obliged to use always their same A320 or B737
In some sectors, there are already contracts where the customer doesn't pay for the machine he uses. In this case he would buy flying time hours. It is a mix of leasing and maintenance contracts. And very short time based, very competitive. Just as you need a van for 1 day .
It could also open the door to end the distinction between regular flights and charter flights.
It will demand flexability of the personel, but also from politicians, law makers, unions.
It doesn't mean that LCC's with their standarised fleets will automatically will make more profit. With more flexability, a full service company could more easely change the kind of airplane -even from another company, just hours before departure, depending on the load factor. The LCC's will be obliged to use always their same A320 or B737
Re: Global Credit Crunch - Possible Effects
Well. Sale and lease back is not a new way to sell aircraft but we will maybe see more leasing as leasing is more comfortable (stable, securer, and safer) for banks than loans financings as they are often the shareholder of the leasing company or in very-close partnership.
Gate A1 : Blog avion passion
-
smokejumper
- Posts: 1033
- Joined: 21 Oct 2005, 00:00
- Location: Northern Virginia USA
Re: Global Credit Crunch - Possible Effects
Today's Wall Street Journal has the following story relating to the subject:
BUSINESS OCTOBER 15, 2008 Airbus Appears Unshaken by Economic Turbulence
By DANIEL MICHAELS and J. LYNN LUNSFORDArticle
European plane maker Airbus is so far shrugging off the economic downturn, saying it has a big order backlog and is seeing strong demand from key markets. But the people who either lease planes to airlines or lend the money to buy them say demand will soon soften and could send jetliner prices tumbling.
Airbus
Aircraft financiers want to avoid a jetliner glut, but Airbus and Boeing still see robust demand.
As well as hitting Airbus's revenue, a drop in plane prices could crimp airlines' ability to buy planes, partly because they often use the value of their existing fleets as collateral to finance new purchases.
Right now, business looks good for Airbus, a unit of European Aeronautic Defence & Space Co., and for U.S. rival Boeing Co. Despite dwindling passenger numbers, many carriers want to replace older jetliners because fuel prices are too high for aging models to operate profitably.
In addition, some carriers with deep pockets, such as those from the Persian Gulf, are growing and grabbing traffic from weaker rivals. Turkish Airlines Inc. on Tuesday said it is soliciting offers for 105 jetliners from Airbus and Boeing.
Airbus this year has orders for 737 planes, after cancellations, and expects to deliver about 470 airliners, more than it ever has. It plans to increase output by almost 20% over the next two years.
Boeing, which has 623 net orders this year, had delivered 325 planes when its factory workers went on strike on Sept. 6. People familiar with Boeing's manufacturing plans say the company won't increase production rates whenever deliveries restart.
Airbus and Boeing both say their customers have already arranged financing for deliveries through most of next year. But, because some of that borrowing might fall through in the credit crisis, both plane makers continue to evaluate their pending deliveries. And many of the people who finance aircraft purchases say the strong demand won't last.
Financiers are a major cog in the air industry because a new jetliner generally sells for between $50 million and $300 million, so even in good times, almost every airline either leases planes or borrows money to buy them. Lessors rent out aircraft to all types of airlines. Demand -- and rental rates -- for their planes shrinks when the airline business softens. Bankers judge the industry's health through the loan rates they can arrange for airlines to buy planes.
They predict that in months to come, the number of strong carriers will drop, leaving Airbus, in particular, with more planes than it can deliver, dragging down the value of aircraft. So they say the plane makers should throttle back on output. "This is the time to pull back and lower production rates," Jeffrey Knittel, president of transport finance at CIT Group Inc., a major New York lessor, said at a recent industry gathering.
Airbus, however, says demand remains strong, noting that when India's Kingfisher Airlines canceled orders for three big A340 jetliners late last month, Arik Air, from oil-rich Nigeria, snapped up the planes.
"Clearly, in light of the financial situation, we are reviewing our production plan," said John Leahy, its chief operating officer for customers and top jetliner salesman. "But we still have very strong demand, and we are confident that these aircraft are needed." Airbus has good reason for wanting to maintain its brisk production rate, because several programs are billions of euros over budget. Its A380 super jumbos are being produced far more slowly than planned, and its A350 ultra-long-range passenger model is years behind schedule. The first flight of its new A400M military transport plane is months late.
Continuing to deliver lots of its established models helps alleviate the cash drain from these new programs.
Financiers, who fund new purchases and also buy and sell older planes, fear overproduction by Airbus might drive down plane prices and reduce the value of the fleet jetliners they own. But others could suffer, too, if the financiers are right. Large airlines also hold planes as assets on their balance sheets, and lower asset values clip their ability to borrow for all kinds of activities -- something that has become harder, anyway, during the credit crunch.
The big fear of financiers is a repeat of the months after the terrorist attacks of Sept. 11, 2001. Then, while Boeing reduced production, Airbus gradually increased output, and the values of Airbus planes fell more than those of Boeing models. One sign that the market has begun to soften: Deutsche Bank estimated in a recent report that Airbus customers have deferred or canceled orders for more than 150 planes this year, up significantly over recent years.
"Airbus is in grave danger of making the same mistake they made after the last downturn," said Klaus Heinemann, chief executive of AerCap Holdings NV, a leasing firm based in Amsterdam.
reference: http://online.wsj.com/article/SB1224008 ... lenews_wsj
BUSINESS OCTOBER 15, 2008 Airbus Appears Unshaken by Economic Turbulence
By DANIEL MICHAELS and J. LYNN LUNSFORDArticle
European plane maker Airbus is so far shrugging off the economic downturn, saying it has a big order backlog and is seeing strong demand from key markets. But the people who either lease planes to airlines or lend the money to buy them say demand will soon soften and could send jetliner prices tumbling.
Airbus
Aircraft financiers want to avoid a jetliner glut, but Airbus and Boeing still see robust demand.
As well as hitting Airbus's revenue, a drop in plane prices could crimp airlines' ability to buy planes, partly because they often use the value of their existing fleets as collateral to finance new purchases.
Right now, business looks good for Airbus, a unit of European Aeronautic Defence & Space Co., and for U.S. rival Boeing Co. Despite dwindling passenger numbers, many carriers want to replace older jetliners because fuel prices are too high for aging models to operate profitably.
In addition, some carriers with deep pockets, such as those from the Persian Gulf, are growing and grabbing traffic from weaker rivals. Turkish Airlines Inc. on Tuesday said it is soliciting offers for 105 jetliners from Airbus and Boeing.
Airbus this year has orders for 737 planes, after cancellations, and expects to deliver about 470 airliners, more than it ever has. It plans to increase output by almost 20% over the next two years.
Boeing, which has 623 net orders this year, had delivered 325 planes when its factory workers went on strike on Sept. 6. People familiar with Boeing's manufacturing plans say the company won't increase production rates whenever deliveries restart.
Airbus and Boeing both say their customers have already arranged financing for deliveries through most of next year. But, because some of that borrowing might fall through in the credit crisis, both plane makers continue to evaluate their pending deliveries. And many of the people who finance aircraft purchases say the strong demand won't last.
Financiers are a major cog in the air industry because a new jetliner generally sells for between $50 million and $300 million, so even in good times, almost every airline either leases planes or borrows money to buy them. Lessors rent out aircraft to all types of airlines. Demand -- and rental rates -- for their planes shrinks when the airline business softens. Bankers judge the industry's health through the loan rates they can arrange for airlines to buy planes.
They predict that in months to come, the number of strong carriers will drop, leaving Airbus, in particular, with more planes than it can deliver, dragging down the value of aircraft. So they say the plane makers should throttle back on output. "This is the time to pull back and lower production rates," Jeffrey Knittel, president of transport finance at CIT Group Inc., a major New York lessor, said at a recent industry gathering.
Airbus, however, says demand remains strong, noting that when India's Kingfisher Airlines canceled orders for three big A340 jetliners late last month, Arik Air, from oil-rich Nigeria, snapped up the planes.
"Clearly, in light of the financial situation, we are reviewing our production plan," said John Leahy, its chief operating officer for customers and top jetliner salesman. "But we still have very strong demand, and we are confident that these aircraft are needed." Airbus has good reason for wanting to maintain its brisk production rate, because several programs are billions of euros over budget. Its A380 super jumbos are being produced far more slowly than planned, and its A350 ultra-long-range passenger model is years behind schedule. The first flight of its new A400M military transport plane is months late.
Continuing to deliver lots of its established models helps alleviate the cash drain from these new programs.
Financiers, who fund new purchases and also buy and sell older planes, fear overproduction by Airbus might drive down plane prices and reduce the value of the fleet jetliners they own. But others could suffer, too, if the financiers are right. Large airlines also hold planes as assets on their balance sheets, and lower asset values clip their ability to borrow for all kinds of activities -- something that has become harder, anyway, during the credit crunch.
The big fear of financiers is a repeat of the months after the terrorist attacks of Sept. 11, 2001. Then, while Boeing reduced production, Airbus gradually increased output, and the values of Airbus planes fell more than those of Boeing models. One sign that the market has begun to soften: Deutsche Bank estimated in a recent report that Airbus customers have deferred or canceled orders for more than 150 planes this year, up significantly over recent years.
"Airbus is in grave danger of making the same mistake they made after the last downturn," said Klaus Heinemann, chief executive of AerCap Holdings NV, a leasing firm based in Amsterdam.
reference: http://online.wsj.com/article/SB1224008 ... lenews_wsj
Re: Global Credit Crunch - Possible Effects
Jet Airways just announcing to cut another 1.100 jobs ..
http://in.biz.yahoo.com/081015/137/6ynk8.html
http://in.biz.yahoo.com/081015/137/6ynk8.html
Re: Global Credit Crunch - Possible Effects
yes, but that has to do with the cooperation between Jet and Kingfisher
Re: Global Credit Crunch - Possible Effects
After the collapse of AIG (= after their federal takeover), it's still not sure what will happen to the largest lease company: ILFC - 100% AIG owned. Will their company policy remain unchanged?
Not only Airbus and Boeing are facing hard times. Bombardier, the third-largest aircraft maker, has said it expects that business jets sales (except the very light jets) will slow down from 1.400 in 2008 to 1.000 in 2009. ILFC is supposed to be one of the first three buyers for the Bombardier CSeries (130/150).
Not only Airbus and Boeing are facing hard times. Bombardier, the third-largest aircraft maker, has said it expects that business jets sales (except the very light jets) will slow down from 1.400 in 2008 to 1.000 in 2009. ILFC is supposed to be one of the first three buyers for the Bombardier CSeries (130/150).
Re: Global Credit Crunch - Possible Effects
What are those journalists smoking?smokejumper wrote:... and its A350 ultra-long-range passenger model is years behind schedule.
-
Advisor
- Posts: 3616
- Joined: 09 Sep 2004, 03:00
- Location: Heart Lies In Rwy 09/27 'D' 'B-3' TaxiTrack
- Contact:
Re: Global Credit Crunch - Possible Effects
Vijay Mallya says none from IT will be retrenched.regi wrote:yes, but that has to do with the cooperation between Jet and Kingfisher
Is there any reciprocity in this 9WIT deal or is it just that 9W had to pay a price....
Aum Sweet Aum.
Re: Global Credit Crunch - Possible Effects
Keep an eye on Indigo !
A report from Indian Aviation:
The load factors for rival low-cost carrier IndiGo, too, slipped from 68% last September to about “55-60%”, according to IndiGo’s president Aditya Ghosh. Kingfisher Red flew its aircraft 39% full in August, the lowest for any carrier in that month, compared with 70% a year earlier when it was known as Deccan, according to the DGCA.
These load factors have fallen even further since the report was published.
If the loads stay at these levels or fall further, then these airlines cannot exist, its financially inviable to continue.
A report from Indian Aviation:
The load factors for rival low-cost carrier IndiGo, too, slipped from 68% last September to about “55-60%”, according to IndiGo’s president Aditya Ghosh. Kingfisher Red flew its aircraft 39% full in August, the lowest for any carrier in that month, compared with 70% a year earlier when it was known as Deccan, according to the DGCA.
These load factors have fallen even further since the report was published.
If the loads stay at these levels or fall further, then these airlines cannot exist, its financially inviable to continue.
There are no strangers in the world, just friends we have yet to meet.
Re: Global Credit Crunch - Possible Effects
well, during the Gulf war, Air India was able to airlift the largest amount of humans ever to repatriate Indian labourers from Iraq.
With all those extra planes from Kingfisher and Jet Airways, they are ready for the next catastrophy.
I mean the Middle East.
Nobody brings up the idea that all those construction works in Dubai and the other emirates is paid by high oil prices and executed mainly by Indians, Pakistanis and Bangladeshis. But the oil is tumbling downwards. So all those immigrant laberours will have to return home.
With all those extra planes from Kingfisher and Jet Airways, they are ready for the next catastrophy.
I mean the Middle East.
Nobody brings up the idea that all those construction works in Dubai and the other emirates is paid by high oil prices and executed mainly by Indians, Pakistanis and Bangladeshis. But the oil is tumbling downwards. So all those immigrant laberours will have to return home.
Re: Global Credit Crunch - Possible Effects
I don't know if it is allowed to say something about share prices.
But if you look at the shares of Cobham Plc that is - as everybody else - doing a nice deep plunge - I think it is a good moment now to take them in your long term portfolio if you see what they have done the last 5-10 years.
Cobham is specialised in aviation components, especially miltary parts. They "invented" areal refuelling.
In case I violated a rule, please just remove my remark, don't blame me.
But if you look at the shares of Cobham Plc that is - as everybody else - doing a nice deep plunge - I think it is a good moment now to take them in your long term portfolio if you see what they have done the last 5-10 years.
Cobham is specialised in aviation components, especially miltary parts. They "invented" areal refuelling.
In case I violated a rule, please just remove my remark, don't blame me.
-
Boeing767copilot
- Posts: 1439
- Joined: 13 May 2004, 00:00
Re: Global Credit Crunch - Possible Effects
Aer Arann is seeking up to 100 redundancies as part of a cost reduction programme. The airline says it wants to concentrate more on charter flights and leasing its aircraft and crews to other airlines. It says key routes will remain unaffected but the company is changing its business model to ensure its long term future.A spokesman said the 100 redundancies is a worst case scenario - it would represent a reduction in staff numbers of around 25%. Currently, the airline operates 12 aircraft on scheduled services and one plane on lease. Aer Arann operates over 600 flights per week, across 40 routes in Ireland to the UK and northern France, as well as Amsterdam. Passenger numbers have grown from 12,000 in its first year to 1.1m in 2006.
source: RTE News
source: RTE News
-
Boeing767copilot
- Posts: 1439
- Joined: 13 May 2004, 00:00
Re: Global Credit Crunch - Possible Effects
SkyEurope Holding AG (“SkyEurope”) entered into negotiations with Flyholding S.p.A., the holding company of myair.com, an Italian low cost airline, to explore a potential strategic alliance promoting operating synergies and economies of scale. The alliance is intended to offer travellers extended geographical reach and improved destination choice at all price levels. Operating synergies will include potential cross utilisation of aircraft capacity, cross ticket selling, facilities sharing and resource pooling at airports where both SkyEurope and Flyholding S.p.A. have a presence. SkyEurope and Flyholding S.p.A. will also explore cross equity shareholdings subject to shareholders’ approval and regulatory clearance, where required.
Re: Global Credit Crunch - Possible Effects
Airlines are suffering from decreasing occupancy, but there's also a bit of relief for them today: it seems that oil is going to close at a 12 month low, after announcement of increased strategic backup in the US ("strategische voorraad"), and ongoing decreasing demand in the US:
http://www.bloomberg.com/energy/
Nymex Crude Future : at 66.82 USD at 15h53
Dated Brent Spot : at 62.87 USD at 16h21
WTI Cushing Spot : at 65.85 USD at 15h44
http://www.bloomberg.com/energy/
Nymex Crude Future : at 66.82 USD at 15h53
Dated Brent Spot : at 62.87 USD at 16h21
WTI Cushing Spot : at 65.85 USD at 15h44
Re: Global Credit Crunch - Possible Effects
I assume expensive fuel is better problem to have than rapidly decreasing demand (although obviously this depends on the figures - if oil dropped to $20/barrel a few empty seats wouldn't be so bad).
IMO Airlines all over the world are going to suffer despite the drop in fuel prices. But for me the situation in the US will be especially fascinating. Few US airlines have turned a profit during the last 10 year period when economic conditions have been mainly pretty good. Clearly there is a lot of over-capacity in that market which is at least partly caused by the ridiculous Chapter 11 provisions which allow inefficient & unviable businesses to survive. So when the next round of bankruptcies strikes (and it will happen) what are the regulators going to do? Bail them out again or allow some to fall over so the strongest can operate in a free market where they will have a chance to prosper when the good times come? Stay tuned
IMO Airlines all over the world are going to suffer despite the drop in fuel prices. But for me the situation in the US will be especially fascinating. Few US airlines have turned a profit during the last 10 year period when economic conditions have been mainly pretty good. Clearly there is a lot of over-capacity in that market which is at least partly caused by the ridiculous Chapter 11 provisions which allow inefficient & unviable businesses to survive. So when the next round of bankruptcies strikes (and it will happen) what are the regulators going to do? Bail them out again or allow some to fall over so the strongest can operate in a free market where they will have a chance to prosper when the good times come? Stay tuned