THE AIRLINE CRISIS IS HERE

My last entry to this blog was posted April 11th, less than two weeks ago. Its headline read: “On The Verge of Major Crisis”. Today I would like to set the record straight: We are not on the verge of a major crisis - we are well inside a major crisis.

The global airline industry is facing the greatest crisis in its history. While I am writing this, crude oil price have reached $120 a barrel; next week it may land at $130 or $140. These last few days all major U.S. airlines have reported their first quarter performance, and they are all in the red. Delta Airlines, for example, reported a $6.4 billion loss!

There are two main questions that need to be answered in the short and medium ranges:
1. At what point will there be a decline in demand for air travel, as tourists and business travelers alike begin to cancel at least some of their travels?
2. What the future holds for Boeing’s and Airbus’ huge backlog? Are all of those theoretical airplanes really going to make it to the real world?

The most recent sign that we are already in a severe crisis is this web site. It belongs to Continental Airlines, the only one of the six major U.S. airlines that can be viewed as successful. If CO have reached a stage of establishing a web site with the purpose of working on “the hearts and minds” of its employees and others and preparing them for a coming merger, there isn’t much left to say.

Tags: airline industry, Continental, fuel