Oil Not Management Will End This Airline + Others

[boeing787]

It will go over $60 by early summer.

 

[BoeingBoy]

As you probably already know, the Sep & Oct futures contracts for light sweet crude are over $59/bbl.

Jim

 

[jimntx]

It will go over $60 by early summer.

[post="260093"][/post]​

Ya think it's going to take that long? I don't. It closed over $57/bbl today.

 

[BoeingBoy]

Here's what passes for the definitive word on fare increases vs fuel prices:

Lakefield said yesterday in a message to employees that results for March and early summer will be better than February, when US Airways lost $119 million, but the recent fare increases -- "a dollar here, five dollars there" -- do not come close to covering the record increases in fuel prices.

US Airways Watch

Jim

 

[jimntx]

A friend sent this to me tonight...

Get some perspective. Think a gallon of gas (or jet fuel) is expensive?

Lipton Ice Tea, 16 oz $1.19 ....... $9.52 per gallon

Ocean Spray, 16 oz $1.25 .......... $10.00 per gallon

Gatorade, 20 oz $1.59 ............. $10.17 per gallon

Diet Snapple, 16 oz $1.29 ......... $10.32 per gallon

Whiteout, 7 oz $1.39 .............. $25.42 per gallon

Brake Fluid, 12 oz $3.15 .......... $33.60 per gallon

Scope, 1.5 oz $0.99 ............... $84.48 per gallon

Pepto Bismol, 4 oz $3.85 ......... $123.20 per gallon

Vick's Nyquil, 6 oz $8.35 ........ $178.13 per gallon

And this is the REAL KICKER...

Evian water, 9 oz $1.49 ............ $21.19 per gallon?! $21.19 for WATER - and the buyers don't even know the source. (Evian spelled backwards is Naive.)




So, the next time you're at the pump, be glad your car doesn't run on water, Scope, or Whiteout, or God forbid, Pepto Bismol or Nyquil.

 

[FWAAA]

So, the next time you're at the pump, be glad your car doesn't run on water, Scope, or Whiteout, or God forbid, Pepto Bismol or Nyquil.

[post="260110"][/post]​

I agree. Vanilla extract routinely sells for about $2 per oz at the grocery store - that would be $256 per gallon.

I buy it by the pint at Costco for about a dollar an ounce. Still horrendously expensive.

Earlier today I posted that brand new 777s probably cost something like 50 to 100 times the price of AA's first 707. Imagine if fuel were 50 to 100 times more costly today than in 1959. Nobody could afford to fly.

 

[usfliboi]

Most anaylist see prices stablizing and most agree its at its peak. Time will tell!

 

[FA Mikey]

Jim 1.5 liters of Evian cost about 2.00. One US gallon = 3.7 liters. A gallon of evian costs closer to 8 dollars. Still a ridiculous price.

I did have dinner once on that (don't ever go to) Island Grand Cayman. Where a 1.5L bottle of evian cost 11 dollars. Use that in the example and see how high the price of a gallon of evian is H2O is.

 

[FA Mikey]

Most anaylist see prices stablizing and most agree its at its peak. Time will tell!

[post="260125"][/post]​

Care to list these MOST analists?

 

[700UW]

Most anaylist see prices stablizing and most agree its at its peak. Time will tell!

[post="260125"][/post]​

WASHINGTON -- Oil prices rallied to a record close above $57 US a barrel yesterday, sparked by a surge in gasoline futures that could send the average retail cost of gasoline above $2.25 a gallon in the United States within a few weeks. Analysts said the nearly $2-a-barrel runup in oil prices suggested there is new money coming into the market from hedge funds and other speculators, as well as from commercial players, such as airlines and fuel distributors, that are trying to lock in prices now out of fear the upward trend may continue

 

[700UW]

Most anaylist see prices stablizing and most agree its at its peak. Time will tell!

[post="260125"][/post]​

Another factor appeared to be an investment bank report that said strong demand and tight supplies could cause a "super spike" that will push oil prices above $100 a barrel.

Oil analyst Marshall Steeves of Refco Group Inc. in New York said the rally in fuel prices is "overdone."

"I don't think the sky's the limit," Steeves said. "At some point, there'll be some impact on demand. But where that price is, is hard to determine."

Oil Prices May Rise

 

[jimntx]

Amen. Certain pilots just keep posting that "analysts say that oil prices are coming down." I think they all own oil company stock because everytime they post that, the price goes up.

Actually, maybe they should click their ruby red uniform shoes together before saying, "Oil prices are coming down. Oil prices are coming down." (For those who are too literal-minded to get the joke, in the Wizard of Oz, Dorothy was instructed to click the red slippers together and make a wish. "There's no place like home. There's no place like home.")

 

[Busdrvr]

Here's what passes for the definitive word on fare increases vs fuel prices:

Lakefield said yesterday in a message to employees that results for March and early summer will be better than February, when US Airways lost $119 million, but the recent fare increases -- "a dollar here, five dollars there" -- do not come close to covering the record increases in fuel prices.

US Airways Watch

Jim

[post="260106"][/post]​

Just to be a little bit of a contrarian...

In the medium term, higher fuel prices may very well help U and UAL.
First, one must come to a conclusion regarding prices and ticket demand. CAL's Mar numbers suggest what I've been saying all along, the price elasticity of demand for an individual airline is VERY elastic, while for the industry it is very inelastic. CAL has reported an INCREASE in demand YOY at HIGHER yields. We'll all likely see similar results.

The game theory explanation of what's going on would take about three pages of writting, but I'll summerize. In the past, without the extremely high oil prices, it was benefitual for one airline to not follow the fare increases. They actually maximized revenue by hanging back. This had the added dimension of being a "short term" strategy due to the hope that they could make UAL and U "go away". Now, the math has changed, the optimal solution in the short term as well as long term is to follow along. Hopefully this will continue to a level that will result fares that actually cover costs.

Another thing to remember, who of all the majors have the most fuel efficient fleets? (I'll give a hint, they start with U)

 

[Bear96]

Care to list these MOST analists?

[post="260132"][/post]​

Well, there's that brilliant analyst USA320pilot, and that's all that flyboi needs to know.

 

[delldude]

Just to be a little bit of a contrarian...

In the medium term, higher fuel prices may very well help U and UAL.
First, one must come to a conclusion regarding prices and ticket demand. CAL's Mar numbers suggest what I've been saying all along, the price elasticity of demand for an individual airline is VERY elastic, while for the industry it is very inelastic. CAL has reported an INCREASE in demand YOY at HIGHER yields. We'll all likely see similar results.

The game theory explanation of what's going on would take about three pages of writting, but I'll summerize. In the past, without the extremely high oil prices, it was benefitual for one airline to not follow the fare increases. They actually maximized revenue by hanging back. This had the added dimension of being a "short term" strategy due to the hope that they could make UAL and U "go away". Now, the math has changed, the optimal solution in the short term as well as long term is to follow along. Hopefully this will continue to a level that will result fares that actually cover costs.

Another thing to remember, who of all the majors have the most fuel efficient fleets? (I'll give a hint, they start with U)

[post="260143"][/post]​

in the end it'll be the ones with the deeper pockets that survive.... B)