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  • Crude's big gains threaten stocks

    Posted May 21 2008, 04:49 PM by Charley Blaine Rating:

    A week ago, I blogged that the stock market rally from mid-March could continue for some time -- if oil prices would cooperate.

    They haven't. Crude oil closed Wednesday at $133.17 a barrel, and stocks tumbled, with the Dow Jones Industrial Average falling 227 points. Things could get worse.

    Here's why the stock market could test the lows of mid-March, amid the worst of the Bear Stearns crisis:   Read More...

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  • Shame on American Airlines

    Posted Apr 10 2008, 01:10 PM by Robert Walberg
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    In the words of Ricky Ricardo, the CEO of AMR Corp. has "some 'splainin' to do."  Whether you believe the parent of American Airlines is merely the victim of a reactionary FAA or not, the fact of the matter is that management had 18 months to comply with the FAA's request regarding the wiring on the MD-80s and failed to act.

    Yes, the planes have been flying safely for years, and yes, the FAA is likely overreacting to criticism from Congress after it was made to look inept in the Southwest Airlines debacle a few weeks back. Nevertheless, the single most important task of any airline CEO is public safety. Failing to address a potential safety risk merely because you didn't think you would get caught is a miserable excuse.

    Maybe AMR's management simply thought the cost of fixing the problem would be too high -- especially since the FAA really hadn't checked that carefully in the past.  With jet fuel costs skyrocketing and the economy slumping, spending more money on maintenance that didn't seem necessary had to be a tough pill to swallow. So AMR chose not to take its medicine in small manageable doses over the past 18 months in hopes that the problem would just go unnoticed.   Read More...

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  • High oil = bankruptcy for auto makers and airlines?

    Posted Mar 11 2008, 08:53 AM by Douglas McIntyre
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    Several companies in the airline and auto sectors could face bankruptcy this year with American Airlines and Ford at the head of the list

    American Airlines dropped 10% yesterday to hit $10.20. The shares have not been at that level since 2004. American lost money three of the last five years. It had a small net profit in 2007 of just over $500 million on $22.9 billion in revenue. The margin is razor thin.

    In 2007, American also had interest expense of over $900 million. Long-term debt is about $9.4 billion.

    In an industry which is as well-known for its bankruptcies as it is for its bad food, 2008 is shaping up as a truly awful year. Fuel prices are rocketing as oil passes above $107 a barrel. The recession is likely to put a drag on passengers, both business and pleasure. The $500 million that American made last year could turn to a loss of several billion in the blink of an eye.   Read More...

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