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• The airlines need your help!

  Posted Jul 10 2008, 04:17 PM by Matt Koppenheffer
  Filed under: CAPS, Airlines, oil
  Rating:

  I typically skip over the periodic emails that I get from various airlines for being part of their frequent flier programs, but the subject line of the email from Delta yesterday -- "An Open Letter to All Airline Customers" -- caught my eye. And it's a good thing I read it, because the letter brought it to my attention that there's an evil group of speculators out there that are driving up oil prices and making all of our lives miserable (please be sure to note my sarcasm).
  
  The letter ended with the plea "We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com." Interested to find out if the airlines actually have found conclusive evidence that speculators are responsible for pushing up oil prices I followed the link. Unfortunately, instead of evidence I got "While everyone is aware that supply and demand constraints contribute to price increases, there’s another force at work that, like gravity, is invisible yet powerful. This force is rampant speculation.   Read More...

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• A scary thought: Gasoline at $7.50 a gallon

  Posted May 06 2008, 06:14 PM by Charley Blaine
  Filed under: Energy, Airlines, oil, Continental, Delta, economy
  Rating:

  

  I'm really not here to scare you, but, get ready, I AM going to scare you.

  The news got lots of attention: Goldman Sachs analyst Arjun Murti predicted Tuesday that the price of crude oil could hit $150 to $200 a barrel in six to 24 months. (Here's one discussion of the report. Another is here.)

  Crude oil in New York promptly jumped to as high as $122.73 a barrel in New York before closing at $121.84. And, as I write this, crude was trading slightly lower in electronic trading. But it also had the perverse effect of pushing the stock market higher. Indeed, the biggest winners in Tuesday's stock market were oil and gas production companies, natural gas companies. (But not refiners; crude oil is rising faster than refiners can push their prices up.) 

  So, if crude jumps to $150 or $200, how does that translate into prices at the gas pump. Here's the scary part.   Read More...

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• High oil = bankruptcy for auto makers and airlines?

  Posted Mar 11 2008, 08:53 AM by Douglas McIntyre
  Filed under: Ford, Airlines, oil, AMR
  Rating:

  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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