Airlines globally could lose $6.1 billion in 2008, on soaring oil prices and financial market dislocation, the head of the International Air Transport Association said, The Wall Street Journal reported Thursday (subscription required).Giovanni Bisignani, managing director of the IATA, which represents 230 airlines, called the sector "a fragile industry in a crisis" and that it's "bracing for more situations of airlines collapsing," due to high fuel prices and lower revenue, The Journal reported. Further, the air travel slowdown, once thought to be contained to developed nations, has spread to global air travel's plum: Asia, he added.
Airline slowdown could hurt Boeing, Airbus
Stock analyst and frequent flier C. Leonard Bauer told BloggingStocks Thursday if the Asian hemisphere is slowing, to go along with sluggish revenue statistics in Europe and the United States, the slowdown "would have wide implications, not just for airlines, but for airplane manufacturers Boeing and Airbus."
"Further consolidation globally, was a given, particularly in nations like India, which had too many airlines even before the global economy slowed, but the concern now is that national carriers will postpone or cancel plane orders," Bauer said. "From a U.S. perspective, that could mean bad news for Boeing. And what's bad news for Boeing is bad news for the U.S economy. Airplane sales have been one of the U.S. economy's few bright spots." [Bauer added that he does not own shares in or have a rating on any airline or airplane manufacturer. However, Bauer does have frequent flier miles/points in American Airlines (NYSE: AMR).]
Boeing's (NYSE: BA) shares fell 10 cents to $63.11 while shares of Airbus' parent EADS fell 20 euro cents to 14.18 euros in Thursday afternoon trading.
Bauer's tonic to jump-start global airline industry? "De-regulation that permits more 'open skies' agreements like that between the U.S. and E.U. and more cross-border mergers and joint venture agreements," he said.
Airline Sector / Economic Analysis: Unfortunately, another data point on the global economic slowdown side of the ledger. High oil prices that have eroded margins of U.S. carriers are beginning to affect foreign carriers, which could result in airplane order postponements or cancellations. Stay tuned.
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Reader Comments (Page 1 of 1)
8-21-2008 @ 2:57PM
Frank Applegate said...
That's right...Post that negative information, reinforce it into the minds of everyone that the airline industry is losing money..not because they are being run lousy by lousy personnel but that they are being slammed by high fuel costs.
Hello...I don't here anyone talking about the positive side: A lot of airlines have hedged their fuel costs and for everyone's information, the one's who have are going to fair quite well Thank-you...How is that for some positive information in this world of skeptics and negative minded people.