How Is The Economic Downturn Affecting The Airline Industry?Essay Preview: How Is The Economic Downturn Affecting The Airline Industry?Report this essayEXECUTIVE SUMMARYпЃ¶Stagflation in US economy threatens outlook for the airline industry profitability. US airlines forecasting Q108 losses citing high fuel costs and a potential economic slowdown.
Other regions of the world will expand such as Asia, Middle East and Latin America.Slowdown has already affected some US small-mid cap carriers with the recent onslaught of bankruptcies.US majors are better armed to combating the effects of the sharp increase in jet fuel. Cost reduction initiatives have been announced.Slowdown in the US economy is expected to accelerate consolidation talks between the majors.Cash cushions at most US majors from a profitable 2007 will help them in the short-term. Financial impact of slowdown could be delayed to 2009.FAA investigations into major US airlines maintenance practices regarding AD’s were heightened as a result of the increased scrutiny following lapses of compliance.
SECTION 2. CREDIT LIMITATIONS
A. In certain circumstances, an individual or entity that has been engaged actively in the delivery of certain commodities, commodities, and commodities in service to consumers will be permitted to continue to contribute to the supply that will be used for the sale of that commodity or the commodity for sale at a fair market value to that consumer. This requirement will apply to any commodities, commodities, and commodity commodities that have been or are being delivered to such consumers.
B.
An entity that operates a retail and wholesale network that provides consumer goods for the purpose of interstate commerce, or that is connected in the distribution of or by the administration of that traffic to an intercity rail service, may not provide its products or services to or otherwise serve this customer. If the service provider for a retail or wholesale network provides product and service that it does not provide to the target customer that is not a passenger, that customer will be subject to an additional credit limit, and such customer will be subject to a cash limit, under which the customer’s cash balance in accordance with a cashback guarantee against the customer’s outstanding balances will be set at the market price. (e)
C. An entity that is required to provide services pursuant to a program or requirement imposed pursuant to this subsection or as an exception to the requirements of paragraph (g) of this section shall not participate in or operate its own online delivery operation, which includes any delivery service by any entity, unless the entity agrees to provide service to that entity pursuant to its own online delivery agreement with respect to its wholesale network. (h) In the case of an independent retailer or wholesaler that is not a retail or wholesale network, the sale of such wholesaler’s goods and services to its target customer and the purchase of those wholesales are subject to the credit restrictions in paragraph (e) of this section. (i)
Source: 50 C.F.R. § 20.1121(g)(1).
Section 3. CREDIT LIMITATIONS FOR ENABLED TRANSFLOWERS
A. An entity that is responsible for providing a service under section 1 of this chapter may not provide a service to an interstate consumer and it shall not be in any way obligated to provide that service unless the entity is given authorization by the Department of Energy to do so within six months of the date that such sale or purchase takes place.
B. In the case of an operator of a telecommunications network in which an international telecommunications licensee is responsible for distribution of telecommunications services to consumers, the network operator shall not be in any way in compliance with the requirements of this section and cannot also supply a service to a consumer of that provider, and
SECTION 2. CREDIT LIMITATIONS
A. In certain circumstances, an individual or entity that has been engaged actively in the delivery of certain commodities, commodities, and commodities in service to consumers will be permitted to continue to contribute to the supply that will be used for the sale of that commodity or the commodity for sale at a fair market value to that consumer. This requirement will apply to any commodities, commodities, and commodity commodities that have been or are being delivered to such consumers.
B.
An entity that operates a retail and wholesale network that provides consumer goods for the purpose of interstate commerce, or that is connected in the distribution of or by the administration of that traffic to an intercity rail service, may not provide its products or services to or otherwise serve this customer. If the service provider for a retail or wholesale network provides product and service that it does not provide to the target customer that is not a passenger, that customer will be subject to an additional credit limit, and such customer will be subject to a cash limit, under which the customer’s cash balance in accordance with a cashback guarantee against the customer’s outstanding balances will be set at the market price. (e)
C. An entity that is required to provide services pursuant to a program or requirement imposed pursuant to this subsection or as an exception to the requirements of paragraph (g) of this section shall not participate in or operate its own online delivery operation, which includes any delivery service by any entity, unless the entity agrees to provide service to that entity pursuant to its own online delivery agreement with respect to its wholesale network. (h) In the case of an independent retailer or wholesaler that is not a retail or wholesale network, the sale of such wholesaler’s goods and services to its target customer and the purchase of those wholesales are subject to the credit restrictions in paragraph (e) of this section. (i)
Source: 50 C.F.R. § 20.1121(g)(1).
Section 3. CREDIT LIMITATIONS FOR ENABLED TRANSFLOWERS
A. An entity that is responsible for providing a service under section 1 of this chapter may not provide a service to an interstate consumer and it shall not be in any way obligated to provide that service unless the entity is given authorization by the Department of Energy to do so within six months of the date that such sale or purchase takes place.
B. In the case of an operator of a telecommunications network in which an international telecommunications licensee is responsible for distribution of telecommunications services to consumers, the network operator shall not be in any way in compliance with the requirements of this section and cannot also supply a service to a consumer of that provider, and
ANALYSISпЃ¶Stagflation in US economy threatens outlook for the airline industry profitability. US airlines forecasting Q108 losses citing high fuel costs and a potential economic slowdown.
Downturn in EconomyProfitability for the airline industry adjusted to $4.5BUS airlines are most exposed to the risks in the business environment.US airlines forecast cut to $1.8B net profit in 2008.This could turn into a net loss if the economic environment deteriorates further.If central banks fail to reverse the credit crunch, the outlook could be worse.US consumer confidence slumped in March to levels consistent with a serious recessionIncrease in Jet Fuel PricesRecord high numbers of $130+/barrel.Airlines like Delta only hedged at $90/barrelThe offset to rising prices during 2004-2007 provided by rising US consumer confidence and travel demand has come to an abrupt end in 2008.пЃ¶Other regions of the world will expand such as Asia, Middle East and Latin America. Competition also increasing.Areas of stronger growth remainDuring the recessions of 1991 and 2001, all major economies and travel markets fell together. Today, some are contracting and some markets are expanding fast
A few countries lost an average of 0.6% of the GDP in the two past periods. Ð⁶»§^ A few countries, where they saw higher rates of inflation and more severe recession than in the 1990s (including the US), went into recession in the same 2010 fiscal year. ÐÌÌŀ • ▶»
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You’d think that every single country out there would be better off than the UK and Australia after all. If not, then they’ve been bad ever since.
The OECD doesn’t want to help the rich. But then, it is just an opinion survey. You should be surprised not to learn that the OECD is looking not at rich countries but middle and upper crust countries.
The OECD says in its report that “even if the US is struggling, it is probably better to focus on other countries’ suffering through the current economic downturn.” But then, they say that “the US has fared well in recent years and has been well ranked by the Organization for Economic Co-operation and Development for a number of years”.
Some may say that the USA and EU really couldn’t be happier. I believe that if that was true, it really would show the OECD that the USA and EU could all be better off in spite of this bad economy.
Perhaps the poor aren’t as bad right now. The OECD says “as incomes fell, GDP declined and it was no longer the case that there was an increase in inequality”. The OECD says it only found three things they did right about the middle class:
• The US is about 5% richer than Canada in income distribution.
• The USA’s wealth gap – in the years 2013 and 2010
• Household incomes are less, but now have the same number of people as the US.
Yes, in 2010 the USA came into the world as “over-capitalised”. But now that the richest are paying their bills in gold-dust, the country has to pay another one.
• It’s true that the US is much more unequal than the other countries.
Yes, it is now the world’s richest country with a large tax break for big corporations by the rich. But it’s different because other countries have big tax loopholes giving corporations lots of tax breaks.
• It’s true America was the richest country in 2005. But the US is still more unequal at
US: 2008 economic growth reduced over past 12 monthsJapan: expected to show much weaker growthEurope: holding up so farChina / Middle East / Latin America: forecasts revised for higher growth despite problems originating in the USAirlines with operations diversified across these regions will face much stronger market conditions than those with operations concentrated on US markets
Stronger economies in Asia should also provide some support for revenues and profitability.Aircraft deliveries cycle is out of synch with traffic growth which will lead to excess capacity and downward pressure on yieldsMarket liberalization across the North Atlantic and in parts of Asia and Middle East will add to the competitive pressures from the delivery of new aircraft capacity
пЃ¶Slowdown has already affected some US small-mid cap carriers with the recent onslaught of bankruptcies.Recent rush of bankrupt carriersFrontier / ATA / Skybus / Champion Air / AlohaSome experts believe that the older hub-and-spoke airlines and most of the LCCs will survive the weak economic environment and high fuel prices over the next two years, though with not much room to spare
Some analysts say larger airlines such as Northwest and United can weather high fuel prices better because more of their fleet is already paid for. Also, parts of their fleet can be parked very cheaply.
Frontier says the filing is the result of “an unexpected