don barrett

American Airline-Come Fly with Me.

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I borrowed the "Come Fly with US" from one of the many airlines that through the years have soared from coast to coast and sometimes across the Atlantic or Pacific Oceans. Delivering their loads of tourists,business travelers and always the military personnel around the world. And many of these airlines were loosing money as they shuffled their passengers and crews from point A to point B. High labor costs,high fuel cost and competition from the other airlines have been the demise of many airlines through the years. I can't remember the company that used the "Come Fly with Me" phrase,but more than likely they are no longer in the airline business.
It seems like every industry has their down times,but the travel industry seems to have more than their share of down times. The U.S. steel industry almost died in the 70s due to Japanese steel,but the steel industry seems to be rebounding. The U.S. auto makers have struggled at different times through the years,but their situation has never been as bad as they currently find themselves in. The U.S. auto makers are being slammed by foreign competition and their own ineptness to make a suitable vehicle for the American consumer.
The airline industry is currently drowning in their own jet fuel and the speculators are driving them to the brink of disaster. High oil and other commodities are not scarce as we have been led to believe. Do you remember the rice shortage and the doubling of rice prices and even the rationing of rice recently. Rice was rationed here for a day or two and the evening news was telling us the world is starving and then suddenly rice came from every nation in Asia. Thailand had tons and tons of stored rice and they then offered it to any nation who needed it. And as rice prices soared due to the hyping by the media,someone was making a lot of cash. The airline industry is being held hostage by the speculators and I don't know what the final outcome will be. These people line up on the news and CNBC and tell you the U.S. isn't cutting back on gas consumption and it's just not true. Myself and everyone I know have cut back on energy consumption for years now and I think most in the U.S. have followed suit. The U.S. has so much oil and we are banned from drilling for it. Brazil just found 1 of the largest oil reserves ever discovered and this site was going to be one of the most expensive sites to drill for the oil. Costs for recovering this oil will run about "$30 a barrel" It cost $30 to drill and by the time it hits the shores here it's $130 a barrel. So,we have no current shortage of oil at this time.
The high cost of oil is already making most people reduce their energy consumption one way or another. The airlines are making some changes to try and survive . They are parking the 747s as they are the most inefficient jets in their fleets and a very simple thing that saves a lot of fuel,slowing down. The U.S. will I hope soon lower the speed limits on the interstates,which would save a huge amount of gas or diesel fuel.
And now lets turn to American Airlines,that all of this has been leading to. What is going to make or break AMR is fuel cost. AMR and the other airlines all are trying to reduce the dependence on fossil fuel as every company and every citizen in the U.S. is trying to cope with this rising expense of energy. AMR and the other airlines will adapt and reduce this expense as much as possible. I still think the oil market is a huge balloon,ready to explode and I can hardly wait for it to happen. In the meantime the airline industry will struggle and some may not survive.
AMR may be strong enough and efficient enough to survive. But,the longer this bubble lasts the more casualties there will be in the airline industry and the trucking companies will start to fold and the energy costs will rise till the bubble pops!!! I think when the bubble bursts soon,AMR may weather the storm and survive and return to profitability.