Bad Joke

Have you heard the old airline joke ?

Q: How do you make a small fortune in the airline business ?

A: Start with a large fortune.

This article doesn’t provide any surprising news. It just reminds you that airlines are lucky to make money in good times. They don’t make any in bad times.

Report: Airlines to lose $4.7B in 2009

”Describing the outlook for the airline industry as “grim,” the International Air Transport Association on Tuesday sharply revised its 2009 earnings forecast downward, estimating carriers across the globe will combine to lose $4.7 billion.

The newest forecasts are nearly double loss projections issued in December, noting deteriorating conditions in Asia, Europe and Latin America. “

I was watching the TV yesterday and somewhat surprised that they were reporting on airport delays just like normal times. I shouldn’t have been surprised. And neither should you. At the airports that count, the prime hours will have delays as usual. Those are the routes that make money in good times and bad and the airlines won’t cut those schedules. So those delays will stay relatively constant as systemwide delays should drop. Overall, traffic has certainly dropped.

Still, the report says the airlines are still predicting a profit for the year.

”Carriers in North America should see modest profits of $100 million.

Low fuel prices, Bisignani said, are the industry’s saving grace. “

We’ll see.

Don Brown
March 24, 2009