Katrina Assures That Delta Won't Be Alone

[WorldTraveler]

Katrina has already been called one of the most powerful hurricanes ever. 1/3 of Gulf of Mexico oil production has already been taken down and it is very likely that some of that capacity will be damaged and cannot be quickly returned to service after the storm passes. Oil will certainly be the first flight for takeoff on Monday morning. Oil in the mid-$70s is almost certain and $80 is not at all out of the realm of possibililty.

Those kind of oil prices will ensure that Delta will not be the only airline filing chapter 11 in the near future; in fact, AA and CO might not want to get too comforable on the sidelines.

 

[luv2fly]

I have wondered that myself. Although AA and CO remain outside BK, what happens to them long term if oil continues to rise to those levels. In light of new BK rules taking effect, could some airlines actually benefit from filing sooner than later?

 

[B.O.B.]

I would imagine that most airlines will be in BK or close to it within the next 6-12 months. The oil prices are going to kill this industry. The LCC's are not going to escape this mess either.

The airlines can try to increase the fares but, one airline seems to raise them and then falls back. Then the rest of the carriers have no choice except to do the same. I wonder if the airlines will increase fares next week and then the question is; will NW follow or not?

 

[mistified]

I would imagine that most airlines will be in BK or close to it within the next 6-12 months. The oil prices are going to kill this industry. The LCC's are not going to escape this mess either.

The airlines can try to increase the fares but, one airline seems to raise them and then falls back. Then the rest of the carriers have no choice except to do the same. I wonder if the airlines will increase fares next week and then the question is; will NW follow or not?

[post="293773"][/post]​

You really don't need to worry. The current White House will save the day!

 

[luv2fly]

Explain.

 

[WorldTraveler]

You also have to consider whether AA and CO and even some of the LCCs would want to remain outside of bankruptcy when so many airlines are in. You can be assured w/ so much capacity operating in bankruptcy, the airlines will suddenly have the last word on getting their costs down. Since everyone except airlines have been making money, it's high time to rearrange the financial arrangements in this industry. Having over half of the capacity in bankruptcy provides the opportunity for a carrier or two w/ some creativity to lead the industry in reworking the system - airports, airplanes, the whole nine yards. When airlines like Delta and Northwest dominate travel at six hubs and probably dozens more medium and small airports, those airports might think twice about how much they rent they expect. Yes, capacity needs to come out of the system in order for prices to rise but even the rules of the capacity that remain in the system need to change.

The root of this crisis is high fuel prices. No airline is exempt. (remember that WN is protected on fuel prices for their current capacity; even if they take over dozens of aircraft from other airlines, they will pay market prices for fuel).

The airlines are finally in a position where they can begin to call the shots and they need to do it.

 

[AA80Driver]

You also have to consider whether AA and CO and even some of the LCCs would want to remain outside of bankruptcy when so many airlines are in.

[post="293862"][/post]​

I'm sure their equity shareholders aren't too eager see a bankruptcy. Doesn't mgmt have a fiduciary responsibility to the owners of the company?

 

[Bagbelt]

Are there any Federal caps on market speculation?-i.e. the "breakers" that kick in if the dow drops frantically? I believe that oil at that level would have far worse consequenses vis-a-vis consumer discressionary spending on travel as opposed to pure spot prices on jet fuel.

 

[NewHampshire Black Bears]

You also have to consider whether AA and CO and even some of the LCCs would want to remain outside of bankruptcy when so many airlines are in. You can be assured w/ so much capacity operating in bankruptcy, the airlines will suddenly have the last word on getting their costs down. Since everyone except airlines have been making money, it's high time to rearrange the financial arrangements in this industry. Having over half of the capacity in bankruptcy provides the opportunity for a carrier or two w/ some creativity to lead the industry in reworking the system - airports, airplanes, the whole nine yards. When airlines like Delta and Northwest dominate travel at six hubs and probably dozens more medium and small airports, those airports might think twice about how much they rent they expect. Yes, capacity needs to come out of the system in order for prices to rise but even the rules of the capacity that remain in the system need to change.

The root of this crisis is high fuel prices. No airline is exempt. (remember that WN is protected on fuel prices for their current capacity; even if they take over dozens of aircraft from other airlines, they will pay market prices for fuel).

The airlines are finally in a position where they can begin to call the shots and they need to do it.

[post="293862"][/post]​

+++++++++++++++++++++++++++++++++++++++++++++++++++++

Good points WT,
BUT ALSO,
One of those changes would certainly be Pension Reform.

That lil' Gem, would fit nicely for AA, don't you think ??

Also, I think "numb nuts" , I mean, DUMBYA, does'nt want anymore carriers dumping pensions on the PBGC.(don't you think) ?

NH/BB's

 

[MCI transplant]

<_< When will people realize that "DEREGULATION" is a complete FAILURE!!??? The bottom line is fairs have to go up! As soon as the general public excepts that the better!!!! If the airlines themselfs can't get the job done, than for the good of the country the Government must!!! (Now I'll duck out of here because I know there will be a lot of , shall we say, disagreement!) But if not reregulate, what????? 😉

 

[aafsc]

<_< When will people realize that "DEREGULATION" is a complete FAILURE!!??? The bottom line is fairs have to go up! As soon as the general public excepts that the better!!!! If the airlines themselfs can't get the job done, than for the good of the country the Government must!!! (Now I'll duck out of here because I know there will be a lot of , shall we say, disagreement!) But if not reregulate, what????? 😉

[post="294044"][/post]​

MCI, I am in total agreement with you on this one. If regulation was still here, we would still have EAL, PAN AM, TWA, and Braniff plus the airlines that are still around. There would be competition and choice in terms of service instead of price; just like the good old days. Deregulation has turned the airlines into flying buses and it is now a pain in the a$$ to fly. But I don't think that the government will admit to the error of their ways because of their egos for one. Unfortunately, I think deregulation is here to stay.

 

[DLFlyer31]

MCI, I am in total agreement with you on this one. If regulation was still here, we would still have EAL, PAN AM, TWA, and Braniff plus the airlines that are still around. There would be competition and choice in terms of service instead of price; just like the good old days. Deregulation has turned the airlines into flying buses and it is now a pain in the a$$ to fly. But I don't think that the government will admit to the error of their ways because of their egos for one. Unfortunately, I think deregulation is here to stay.

[post="294202"][/post]​

Deregulation has been a success for consumers. Fares are dramatically lower and the number of flight options is better for most (except for some very small markets). Safety has not been compromised...the accident rates since deregulation has continued to decline. Some of the only negatives for consumers are delays and security hassles, but that is less a fault of deregulation and more a fault of government agencies that can't keep up.

For airline employees, deregulation has been a mixed bag. Deregulation has created far more airline jobs than there ever would have been under regulation. Many airline employees complain about the pay/benefits, but if deregulation hadn't happened you wouldn't have an airline job at all!!!!

 

[WorldTraveler]

DLFLyer,
I think it is safe to say that the majority of those employed by airlines today were hired because of deregulation. I'm not sure that their livelihoods are going to end up better than they were in deregulation. A number of those who were near the end of their careers will likely lose alot in pensions; wages will never go as high as they once were and everyone will work harder. I'm not entirely sure that in the long run the total inflation adjusted wages for airline employees as a group will be that much higher than it was before.

Yes, NHBB, hopefully Congress will get serious about pension reform. It would certainly help AA although I doubt if Congress would act if AA is the only beneficiary. There is no certainty that DL, NW, or CO would terminate their pension if they went into bankrutpcy. Although they have knocked off significant amounts of debt, you will notice that UA and US have given fairly large amounts of ownership of the ownership of the reorganized company to the PBGC or have forked over notes or cash. Some creditors may decide they would rather not give up their spot in line just so the PBGC can belly up to the bar.... whic of course is exactly what the PBGC wants to happen.

Howdy, Fly. It's been a while since we chatted. How are you doing?

 

[aafsc]

Deregulation has been a success for consumers. Fares are dramatically lower and the number of flight options is better for most (except for some very small markets). Safety has not been compromised...the accident rates since deregulation has continued to decline. Some of the only negatives for consumers are delays and security hassles, but that is less a fault of deregulation and more a fault of government agencies that can't keep up.

For airline employees, deregulation has been a mixed bag. Deregulation has created far more airline jobs than there ever would have been under regulation. Many airline employees complain about the pay/benefits, but if deregulation hadn't happened you wouldn't have an airline job at all!!!!

[post="294242"][/post]​

How do you know I would never have had a job at all? Are you all seeing and all knowing?A lot of what has happened in the industry has been the transfer of assets, EA Latin routes to AA, PA routes to UA and DL etc. Also mergers like DL and WA, NW republic, TWA ozark and all the others have made the industry about the same size or slightly larger but have reduced the number of players. The biggest increases has come from the growth of the commuters.

 

[smfav8r]

DLflyer31,

Your comment of safety has not been compromised is not exactly accurate.

The accident record is on the decline because of the automation in advancements in aircraft technology.

The experience level in the cockpit has been on the decline.

The growth in the industry has primarily been at the regional airline level. The rapid deployment of the RJ's over the past 10+ years has been substantial.

The average new-hire pilot level of experience is far below the average new-hire experience at the legacy level. With quick upgrades of two years and less we now see many Captains on the RJ with experience level's less than that of the average new-hire pilot at a legacy.

Technology has helped out greatly in keeping these aircraft out of the dirt.

I'm not saying that the pilots at the regional level are poor pilots, generally they are young, ambitious and very motivated. They just don't have a high experience level which can lead to an unwise decision in an abnormal/emergency situation.