KarlB737
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UA Exec-Oil Price Rise Could Cause Grounded Planes

Wed Nov 07, 2007 10:48 pm

I have been beginning to wonder how the airlines were eventually going to react to this oil price situation. Lets face it they are caught right in the middle. Generally speaking higher ticket prices and/or fewer flight frequencies could be the order of the day. To my fellow A-netters do you know of any other concepts that they could try? For example is their merit to using a larger aircraft to carry more passengers in one flight on some applicable routes? Or just cut frequencies using the same aircraft. And where does reconsideration of turboprop aircraft become a must to compensate. We all know this oil thing is a mess and is out of control and I for one don't see any light at the end of the tunnel for the airlines.

It will be interesting to me how the low-fare carriers handle this as well as the legacy carriers.


Courtesy: Chicago Tribune

United Exec Says Oil Price Rise Could Cause It To Ground Planes

http://www.chicagotribune.com/busine...il-united-capacity,0,2673485.story

Same story from the Associated Press:

http://biz.yahoo.com/ap/071107/united_airlines_oil.html?.v=1

[Edited 2007-11-07 14:53:53]
 
phelpsie87
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Wed Nov 07, 2007 11:13 pm

Not a big surprise...esp when UA was planning oil at a lower price. Or did they reconsider?
 
N174UA
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Wed Nov 07, 2007 11:15 pm

Nothing new. UA did the same thing back in the late '70s the last time oil spiked. DC-10's and other guzzlers were parked, and then brought back when things calmed down.

Makes perfect business sense.  Smile
 
jbernie
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Wed Nov 07, 2007 11:21 pm

I wouldn't be surprised that once one airline drops frequencies etc the others will follow along pretty quickly, even if they aren't in a crunch at that point they can use the same excuse and to be honest if they can save a few $$ now they may delay/avoid some extra pain later.

Though reality says at some point some flights aren't going to be cost effective, frequency will probably go first to try and get fuller flights and/or be able to reassign some aircraft to different routes where they can be used better.
 
777fan
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Wed Nov 07, 2007 11:27 pm

Isn't UA's BKK recovery plan based on $50/bbl oil?! WTF? I've noticed that fares have quietly crept up but certainly not at a pace commensurate with oil. Assuming this becomes reality, which aircraft (and routes) would be the first to go? Here at BWI, winter service to ORD calls for more 733 frequencies (vice the 752-dominant summer schedule). Some smaller, mainline markets would inevitably get squeezed by a sudden lack of 737s, assuming of course that they're deemed the most "inefficient" in terms of fuel consumption and pax loads. Is it possible that some mainline routes would be reverted to UAX service?


777fan
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Tan Flyr
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:00 am

Probably the first to go would be frequencies..might actually help the situation (JFK/ORD/LAX) if fewer flights with larger planes are used.I wonder if there will be enough traffic to warrent alot of the newly skdTATL flying? Alot of cancellations would either free up more767/777's &/or more757 TATL.

The RJ would have to find long narower niches to be cost effective. Short Haul would revert to the next gen turbo-props.

We could see more go bk..maybe the consolidation into 3 mega carriers..American Continental,Delta West,and United Airways..or some other combo.

NO MATTER what, the public will eventually get the short end of the deal.

You know history repeats itself...recession in 1970 when the first 747's came on..then the oil shock of 73-74...now it would be the 380...with an economic downturn globally those operaqtors better have a plan B..or they are in deep Caca.

Could accelerate the 737 composit replacement also..

tht is my quick 2 cents.
 
tozairport
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RE: UA Exec-Oil Price Rise Could Cause Grounded Pl

Thu Nov 08, 2007 12:16 am

Quoting KarlB737 (Thread starter):

United Exec Says Oil Price Rise Could Cause It To Ground Planes

Blah blah blah, fear, hear, fear. More junk from arguably the worst management in aviation history. This comes from the same group of idiots that say things like "perish" and "would you rather merge or go bankrupt". Truly, if UA cannot make it after all that it stole from the employees, then it probably doesn't deserve to exist. After a while, one just doesn't really care if there is a wolf or not, so these words from Joke Brace ring awfully hollow...
Meet the new boss, same as the old boss.
 
jacobin777
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:22 am

Quoting Tozairport (Reply 7):

Blah blah blah, fear, hear, fear. More junk from arguably the worst management in aviation history.

I'm curious to know if they are the so-called "worst management in aviation history" then why do they have one of the better profit margins in the industry lately? Why have they won new routes to China? Why have they opened a successful Middle East route?
"Up the Irons!"
 
prebennorholm
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:27 am

Quoting 777fan (Reply 4):
Isn't UA's BKK recovery plan based on $50/bbl oil?! WTF? I've noticed that fares have quietly crept up but certainly not at a pace commensurate with oil.

Fuel is a significant cost for airline companies. But it is often overrated as such.

On a 1,000 miles sector the difference between crude at $50 and $100 is some $30-35 per pax on a fairly well filled 737 or 320 plane. It doesn't make or break air traffic.

On long range flights the fuel price is more significant, simply because it costs a lot of fuel to transport all that fuel. On an 8,000 miles sector the difference would be more $400-500-ish.

When the average Mr. or Mrs. Earth citizen spends one dollar (excluding taxes) on oil products, then he/she spends 3 cent on jet fuel. For the average EU citizen it is 2.5 cent.

We suffer a lot more by the 97 cent getting inflated by 100%.
Always keep your number of landings equal to your number of take-offs
 
multimark
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:30 am

Quoting KarlB737 (Thread starter):
I have been beginning to wonder how the airlines were eventually going to react to this oil price situation. Lets face it they are caught right in the middle.

That should be amended to how the "US airlines were eventually going to react". The depreciating US dollar has made it very difficult for them to cope, whereas Canadian carriers (and others with appreciating currencies) are having the increase in fuel prices offset by their increased purchasing power.
 
UnknownUser
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:35 am

Quoting Prebennorholm (Reply 9):
On a 1,000 miles sector the difference between crude at $50 and $100 is some $30-35 per pax on a fairly well filled 737 or 320 plane. It doesn't make or break air traffic.

Oh please.  Yeah sure , profit margins are razor thin and 30-35 per pax IS a big deal. It will make or break it.

This whole oil situation is bullshit. It's not that it is costing more to produce oil, it is just that they can make more money. Oil execs = M.F.ers
Die Skybus!!! You need to die for the good of the industry!
 
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lightsaber
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RE: UA Exec-Oil Price Rise Could Cause Grounded Pl

Thu Nov 08, 2007 12:38 am

Quoting Prebennorholm (Reply 9):
We suffer a lot more by the 97 cent getting inflated by 100%.

True.

But that cuts down on disposable cash. Thus we buy fewer things.

1. Cut in business travel due to reduced trade.
2. Cut in leisure travel due to we're broke.

But what else are they going to say? "Hey, our customers were HELOC'ing their homes to live like kings and now they're broke and so are many of the salespeople?"  no  That wouldn't be good for the stock price.  Wink

Lightsaber
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evolv
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:46 am

Its probably the start of seeing more train service in North America. HSR will begin to make sense on shorter routes. An example would be YYC-YEG. The Alberta government is considering funding a portion of the capital costs required to run a high speed train between Calgary and Edmonton. A high speed train would most likely mean an end for air service between the two cities (HSR would be much faster, only 80 mins core to core)
 
Tan Flyr
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:49 am

Quoting UnknownUser (Reply 11):
This whole oil situation is bullshit. It's not that it is costing more to produce oil, it is just that they can make more money. Oil execs = M.F.ers

yes, we know that is does not cost more to "produce" a barrel of oil, but like it or not it cost more to procure due to a whole list of issues, including futures speculation, fear,war & greed. BTW, did you know that the vast majority of oil in the world is produced by foriegn government owned oil companies?

Maybe yuo should check your facts a bit..but quite a significanr portion of oil to the US comes from places like Mexico, Veaezuela, Saudi Arabia, Indonesia..and the refiners have to pay cash for it.
 
itsnotfinals
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:50 am

Quoting N174UA (Reply 2):
Makes perfect business sense.

and a great way to renegoitiate lease rates  Smile
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evolv
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:55 am

Quoting UnknownUser (Reply 11):
This whole oil situation is bullshit. It's not that it is costing more to produce oil, it is just that they can make more money. Oil execs = M.F.ers

you need to do some reading before posting bull shit. I think there is a good article on CNN money right now about this very topic. I beleive it is called "How much does Exxon pay for oil?" Read it and get your facts straight.

One hint oil companies don't control oil prices. Oil companies are price takers.

[Edited 2007-11-07 16:56:21]
 
ikramerica
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:59 am

Quoting TAN FLYR (Reply 14):
yes, we know that is does not cost more to "produce" a barrel of oil, but like it or not it cost more to procure due to a whole list of issues, including futures speculation, fear,war & greed.

which is why it will collapse just like it has in the past. when inflated prices are based on hysteria and hype, they crash. be it gold, oil, stocks real estate. we've seen stocks and real estate crash or slide, gold and oil are next...
Of all the things to worry about... the Wookie has no pants.
 
apodino
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:06 am

United recently started hiring pilots off the street again. If they end up parking 100 planes, I don't see how they avoid furloughs again. I hope this doesn't happen, but my faith in Tilton gets lower and lower every day (it was never high to begin with)
 
UnknownUser
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:07 am

Quoting Evolv (Reply 16):
I beleive it is called "How much does Exxon pay for oil?" Read it and get your facts straight.

Yeah, I read that yesterday. recall this?: Of course, with Exxon walking away with over $9 billion in profit for the last three months

Companies should make money. That is what they do and I don't have a problem with them making money. However, $$$9,000,000,000 is wayyyy to much. People and businesses are suffering while oil companies are rolling in the cash.
Die Skybus!!! You need to die for the good of the industry!
 
worldtraveler
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:11 am

Quoting Jacobin777 (Reply 8):
I'm curious to know if they are the so-called "worst management in aviation history" then why do they have one of the better profit margins in the industry lately? Why have they won new routes to China? Why have they opened a successful Middle East route?

not to pile on, but UA did have the longest running and most expensive bankruptcy in US airline history and it took 7 years for it to return to a leadership position financially in the industry. UA also got its sole China route because no one else applied. KWI is a good route for sure but other carriers have done equally as good w/ other new routes. I would hardly characterize these thing as evidence UA is well run.

Quoting Evolv (Reply 13):
Its probably the start of seeing more train service in North America.

Trains use fuel too... and the problem w/ the passenger rail is that there are almost no dedicated passenger tracks in the US and freight tracks are already very heavily used. The cost of building rail is far more expensive than the increased cost of oil, since land for new track is very high priced.

Quoting TAN FLYR (Reply 14):
Maybe yuo should check your facts a bit..but quite a significanr portion of oil to the US comes from places like Mexico, Veaezuela, Saudi Arabia, Indonesia..and the refiners have to pay cash for it.

Much of the increase in the price of oil is due to the devaluation of the dollar which has been necessary to keep the US and world economy from sinking due to the subprime mortgage mess. Aviation is, once again, a friendly fire casualty in a much bigger conflict.

And US airlines have generally done a pretty good job of withstanding the increase in oil prices due to strong demand and the reduction of domestic capacity. It's not clear how long that will last, esp. since LFCs continue to add capacity left and right.
 
sacamojus
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:12 am

I don't see this "problem" of high oil prices going anywhere. The war in Iraq and Middle East instability are no longer the only primary causes for spikes in oil. Rapid growth in China, India, and other growing countries are putting more pressure the price of oil as they continue to demand more. I can't wait to see which country develops and institutues an new energy infastructure not based on fossil fuels.

Back to the airline industry, They will cope whether it is parking planes, consolidation, liquidation, etc.
 
Tan Flyr
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:14 am

Quoting UnknownUser (Reply 19):
Companies should make money. That is what they do and I don't have a problem with them making money. However, $$$9,000,000,000 is wayyyy to much. People and businesses are suffering while oil companies are rolling in the cash.

we are off topic, but one final remark about this...maybe you ougfht to ask all the millions of GLOBAL shareholders if they thought that is too much when they get their dividend check? Oil companies in America are owend by stockholders, and I'd bet that almost everyones IRA OR 401k has oil company stock in them.

Maybe all this will be enough to stifle all the elk and bear huggers and we can start to drill in ANWR and produce American oil.
 
acvitale
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:20 am

This insight I can provide.

On a typical 7 hr sector transatlantic as an example...

B767 - 230 Seats...

Fuel burn at 1650 GPH
7 Hrs Blk
Total Fuel Burn.... 11550 Gallons per segment

2 Segments to Roundtrip = 23100 Gallons

Fuel price per gallon today compared to last year $3.05 p/gal vs. $1.99 p/gal

Difference is $1.06 p/gal x 23100 Gallons = $24,486 per RT flight

230 seats @ 67% load = 155 revenue seats on average

24486 / 155 = $158 addl cost per rev pax...

Hope this helps
 
planespotting
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:20 am

Quoting Ikramerica (Reply 17):
which is why it will collapse just like it has in the past. when inflated prices are based on hysteria and hype, they crash. be it gold, oil, stocks real estate. we've seen stocks and real estate crash or slide, gold and oil are next...

Exactly - I'm really starting to believe that there is an Oil bubble. I'm not willing to bet all my money on that or anything, but if I were an energy trader, I would definitely start going short on oil now that it's nearing an extreme psychological high.
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nudelhirsch
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:22 am

Anyways, it's a nice way to cover a profit warning without doing so. Stock price will not drop but you warned all of the world of profits to drop deeeeeeeeeep.

Are there some poor numbers UA is going to present? Looks like it. Early finding of a scapgoat...
Putana da Seatbeltz!
 
ikramerica
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:25 am

Quoting Sacamojus (Reply 21):
Rapid growth in China, India, and other growing countries are putting more pressure the price of oil as they continue to demand more.

There is not an oil shortage or even a run on supply. OPEC could pump more oil if they wanted, and China and Mexico are opening new fields in the Gulf of Mexico.

The price spike is due to speculation, fear and greed. That's the definition of a bubble.

People said the same thing as you back in the late 70s, just about different nations. We were also just about to hit "peak oil" back then. Thing is, it was the same situation, and the bubble eventually burst, and in the 1980s, oil was stupidly cheap as a result, as there was now a glut of oil due to overproduction...
Of all the things to worry about... the Wookie has no pants.
 
joeljack
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:27 am

http://www.marketwatch.com/news/stor...383%2DDA18E142BCFD%7D&siteid=yhoof

It says in this article that United will be grounding 13 narrowbody aircraft next year. Does anyone know what types and for what reason? Ground 13 airplanes is a pretty big deal.
 
777fan
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:31 am

Quoting Evolv (Reply 13):
Its probably the start of seeing more train service in North America.

Good luck - have you heard of Amtrak?! Should've been out of business yeeeeears ago!

Quoting TAN FLYR (Reply 14):
yes, we know that is does not cost more to "produce" a barrel of oil, but like it or not it cost more to procure due to a whole list of issues, including futures speculation, fear,war & greed.



Quoting Ikramerica (Reply 17):
which is why it will collapse just like it has in the past. when inflated prices are based on hysteria and hype, they crash. be it gold, oil, stocks real estate. we've seen stocks and real estate crash or slide, gold and oil are next...

It's simple supply versus demand. In reality, nobody gives a hoot about unrefined oil and with U.S. refineries running at or near 100% capacity, there's little margin for error. Increased fuel prices are due in part to the fact that everyone is wigging out about the possibility that a slowdown at even one refinery or pipeline will choke supply even more. Heh, we've managed to stear clear of geopolitics but something as simple as, say, a U.S.-Iranian naval skirmish in the Gulf of Oman or Persian Gulf will exascerbate fears of a shortage and drive prices up even more. Oh yeah, and there's that whole explosive-economic-growth-in-China-thing that has given birth to yet another oil addict in the making.

Good thing we're not 1) drilling in ANWAR, 2) really seeking alternative energy sources, and 3) squeezing out oil shale in the Rockies (estimated to be the world's largest oil reserve).  sarcastic 

Quoting TAN FLYR (Reply 22):
companies in America are owend by stockholders, and I'd bet that almost everyones IRA OR 401k has oil company stock in them.

Tell me about it. If you can't beat them, join them.

Quoting ACVitale (Reply 23):
Hope this helps

Sure does, thanks.


777fan
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nudelhirsch
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:39 am

The bubble will only not collapse because the USD is weak compared to other currencies. It's a shame actually. But the import power of other countries, or regions like Europe, is quite high...

Thing is, 777, your model is not basically wrong, it's just not very accurate. Because Europe is a strong purchasing power for oil, especially with the Europ being strong these days. And over here, people REALLY look for alternative energies. And if nothing pops up there, importing fuel is not too hard these days for European airlines.
America is not independent and far and above world economics, other than their folks want it to be... Sorry to say so...
Putana da Seatbeltz!
 
57AZ
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:41 am

Quoting WorldTraveler (Reply 20):
Trains use fuel too... and the problem w/ the passenger rail is that there are almost no dedicated passenger tracks in the US and freight tracks are already very heavily used. The cost of building rail is far more expensive than the increased cost of oil, since land for new track is very high priced.

Not really. Capacity can be improved by additional technology that is being developed. Also, many railroad right of ways are sufficiently large to allow the double tracking of existing routes-in fact, many routes that are single track Centralized Traffic Control were originally double track main lines. The introduction of CTC doubled capacity, allowing railroads to eliminate many sections of double track to save on taxes. There are also additional lines that have been railbanked, which could be reopened to relieve pressure on certain regions of the rail network.

Addressing fuel consumption, trains are the second most efficient mode of transportation. Many passenger railroads operate using electric locomotives. With economy of scale, electric operations are not much more expensive than conventional diesel electrics over time. Also, many railroads can invoke eminent domain to take land necessary for their expansion/growth. Whether or not they can use ED depends on their charter.

All that aside, the bottom line for aviation is that we cannot assume that fuel costs will return to the levels that we were previously accustomed to. Maybe it's a bubble, but maybe it's not. If it's not (and I suspect that it isn't), aviation will have to change it's assumptions and quickly. The fact is that oil companies have to acquire the oil from the nations that control the lands of their oil fields. There is a growing backlash in certain regions where the local populace believe that they are being cheated out of wealth that should be theirs by the oil companies through graft and low royalty payments. The truth is that there is a political premium that exists and it is that which is pushing up the cost of crude oil. Even if you get the extra oil at a bargain rate, it's no good to you if you can't increase production to take advantage of higher prices. Our refineries are at capacity.
"When a man runs on railroads over half of his lifetime he is fit for nothing else-and at times he don't know that."
 
gigneil
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:45 am

Quoting Rbgso (Reply 5):
What animals would those be?

You realize than ANWR stands for Arctic National Wildlife Reserve, right?

Quoting Rbgso (Reply 5):
So the arctic tundra is the only thing keeping the entire climate on this planet stable? Source please....

Who the hell needs a source for knowing that air flows from the polar areas is a key regulator of worldwide weather? And that the warming trends affecting polar regions directly relates to other weather trends?

I went to elementary school. Affecting the atmospheric conditions in polar regions, which drilling and refining operations surely would, could easily kill us all. If you have any kids in middle school, ask one of them to show it to you in their textbook.

NS
 
ANother
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 7:23 am

Quoting Prebennorholm (Reply 9):
When the average Mr. or Mrs. Earth citizen spends one dollar (excluding taxes) on oil products, then he/she spends 3 cent on jet fuel. For the average EU citizen it is 2.5 cent.

Do you have a source for this? (I'm not arguing, I just would like to look at the evidence here) Thanks!
 
evolv
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 8:52 am

Quoting 777fan (Reply 27):
Good luck - have you heard of Amtrak?! Should've been out of business yeeeeears ago!

It has done poorly in an era when oil was cheap. We can't use past sucesses or failures to analyse current market conditions. We have never had oil at around $100.00 a barrel. When gas prices start to surge you will see more people opting for forms of transportation that rely less on hydro carbons. Its a simple economic model. People are not going to be able to afford to drive a car or afford increased airfare due to fuel surcharges.

For our current situation I think we must look at Europe. Train service works over there because fuel is so expensive.

Expect to see a huge shift in north american menatlity.

Quoting UnknownUser (Reply 18):
Companies should make money. That is what they do and I don't have a problem with them making money. However, $$$9,000,000,000 is wayyyy to much. People and businesses are suffering while oil companies are rolling in the cash.

They try to maximise profits (an expectation of any company) with the current market conditions. Current market conditions have given them $95 oil. The oil and gas industry is a cyclic business and there has been tough times for oil companies but they dealt with the market conditions and adapted (those who didn't failed). Any one who lived in Calgary in the 1980"s (i was too young but have been told) will know this.

Bringing it back to aviation. I think high cost of fuel will be good, more fuel efficient planes will be built, airlines will have to think creativly to make it in the business and the list goes on. Those who don't adapt will fail. Its a capatilistic system working perfectly.
 
bennett123
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 9:01 am

Train service also works for other reasons, population density for instance.
 
Rbgso
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 10:36 am

Quoting Gigneil (Reply 30):
You realize than ANWR stands for Arctic National Wildlife Reserve, right?

Yes, thank you, I was well aware of that.

Quoting Gigneil (Reply 30):
I went to elementary school. Affecting the atmospheric conditions in polar regions, which drilling and refining operations surely would

There would be no refining operations in the arctic, that would be cost prohibitive. Drilling and transporting would have an extremely limited impact, if any at all.

So it take it then you have no source, is that correct? Well, thanks for playing, and have a safe trip home.
 
UAL777UK
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 10:59 am

Quoting WorldTraveler (Reply 19):
not to pile on, but UA did have the longest running and most expensive bankruptcy in US airline history and it took 7 years for it to return to a leadership position financially in the industry. UA also got its sole China route because no one else applied. KWI is a good route for sure but other carriers have done equally as good w/ other new routes. I would hardly characterize these thing as evidence UA is well run.

Yawn, getting boring with this 3 years in Bankruptcy business...sure they were, christ, it was just after 9/11, Afganistan, Iraq, Jeez, need we go on, no company in their right mind would have been in an easier situation than UA, during that time. They used CH11 to there full advantage and before anyone flames me on that point, they did not make the rules, they used them, one could argue to agree they abused them as well. If AA, DL, NW had entered CH11 at that time as well I dare say they would have stayed in there that lenght of time as well.

IAD - PEK was a route they had to fight for and won, SFO -CAN granted. Other loss making routes JFK-LHR have been dumped and more profitable routes opened up.

Dont get me wrong UA has a long way to go, I know that for sure but what Tilton has done hasa been nothing far short of a miracle. Wheres all those people on here now that stated that UA when in CH7 was going to be CH7 in afew weeks time...hmm, I wonder. He has had to make very tough decision....anybody that thinks those decisions are not going to piss people off and affect them are living in a dream world I am afraid.

my
 twocents 
 
ltbewr
Posts: 12388
Joined: Thu Jan 29, 2004 1:24 pm

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:23 pm

What may be the first things will be fewer seats on each flight being sold at heavily discounted advance fares to the general public, lower discounts to major business customers and probably higher base fares.
Probably some low yield and revenue flight frequency will be cut as well as grounding the least fuel efficient aircraft.
I doubt we will will ever see oil prices drop below $75/bbl again. Increasing long-term demand from the USA, China, India and other countries, continued issues of instability in a number of the oil producing countries and greed by the producer countries will keep prices high. A major terror act upon a major pipeline, distribution facility, change in governance in a major oil producer country or even of non-producer like Pakistan, could also spike prices well beyond $100/bbl for months. Add to that the massive drop in the value of the US Dollar, USA government debt, the massive losses by lenders throughout the world in high risk real estate mortgage debt in the USA, and you got the makings of a serious recession that will affect the world which in turn will short term deeply affect everything including the airline industry.
 
keesje
Posts: 8745
Joined: Thu Apr 12, 2001 2:08 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 12:43 pm

Imagine some aircraft sales person telling Jake Brace

they won't bring out a new narrowbody for the next ten years

because their backlogs are ok and they have other priorities

"Never mistake motion for action." Ernest Hemingway
 
B6MoneyGuyJFK
Posts: 94
Joined: Wed Jun 28, 2006 9:28 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:10 pm

Part of the problem is that the price of oil is based on US dollar per barrel.
A weak dollar means that a barrel of oil has less value than a strong dollar, Which helps drive the price up, which further weakens the dollar, which causes the price of oil to rise...Its a vicious cycle.
Opinions are like @ssholes. Everyone has one, and everyone thinks everyone elses stinks!
 
mcdu
Posts: 900
Joined: Thu Apr 28, 2005 5:23 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 1:48 pm

Quoting 777fan (Reply 4):
sn't UA's BKK recovery plan based on $50/bbl oil?! WTF?

What was DL's and NWA's BK exit predicated on? Did you notice that UAL made half a billion dollars in the last quarter? Gas was more than 50bbl at that point so how on earth did they earn that much?????? Revenues!!!!!! With higher revenues and some fare increases that stick this is the reason that the BK exit which is several years OLD now is not applicable. If you care to make a comparison what was CAL's BK I and II exit plans predicated on? That plan is only good on the day it is accepted by the BK court. After that the company is run as a business as normal and I think the 500million profit for the previous quarter is a pretty good indicator.

Quoting WorldTraveler (Reply 19):
UA also got its sole China route because no one else applied. KWI is a good route for sure but other carriers have done equally as good w/ other new routes.


SOLE CHINA ROUTE??????????????????? Oh come on WT, don't start your USAviation Forum drivel on this board. Please use some facts as opposed to the ridiculous spin that you are generating now. This is from the new CAN press release:
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------
United Airlines announced today that its San Francisco - Guangzhou service will begin on June 18, 2008. United is the first U.S. carrier to offer daily, nonstop service between San Francisco and Guangzhou. The flight is now open for sale.

With the launch of the Guangzhou service, United will serve 3 cities in China and 14 in the Asia-Pacific region with 160 weekly departures from the U.S. to Asia and Australia, continuing to make United the largest trans-Pacific carrier.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

So UAL serves 3 cities in China from 3 different hubs. We even serve PEK from IAD/SFO and ORD. How much transpac flying does DL do?

So KWI is a good route but you think other routes are better? If so then why do we do so well to KWI while DL is struggling in the Dubai market? From my contacts I have heard that DL is having difficulty competing with the world leading airlines of the region. UA has Pentagon to warzone service, DL can only get you within an hour's flying time to the region and yet you have to get to NYC to make the trip.
 
SPREE34
Posts: 1561
Joined: Tue Jun 29, 2004 6:09 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 2:59 pm

Quoting UnknownUser (Reply 10):
This whole oil situation is bullshit. It's not that it is costing more to produce oil, it is just that they can make more money. Oil execs = M.F.ers

Could you elaborate? Feel free to continue with the colorful metaphors, but elaborate please.

Quoting UnknownUser (Reply 18):
Yeah, I read that yesterday. recall this?: Of course, with Exxon walking away with over $9 billion in profit for the last three months

What was the Profit Margin? You state a dollar figure that is basically meaningless. "Oh WOW 9 Billion" is what a lot of people will say, but with no idea of what part of the picture $9B is. 9 billion on on what Revenue amount?
I don't understand everything I don't know about this.
 
RDUDDJI
Posts: 1700
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 3:56 pm

UA poorly run...not if you are a stockholder! I'll take reporting record profits!

Quoting WorldTraveler (Reply 19):
not to pile on, but UA did have the longest running and most expensive bankruptcy in US airline history and it took 7 years for it to return to a leadership position financially in the industry. UA also got its sole China route because no one else applied. KWI is a good route for sure but other carriers have done equally as good w/ other new routes. I would hardly characterize these thing as evidence UA is well run.

False. UA beat out all competitors in winning IAD-PEK last year. Even your beloved DL, who as you know is a non-competitor in China. And now UA will add SFO-CAN. If you want to trash UA (or its network), I suggest looking somewhere outside of the Pacific!
Sometimes we don't realize the good times when we're in them
 
soon7x7
Posts: 2267
Joined: Thu May 04, 2006 10:51 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 4:41 pm

GLOBAL OIL BLUNDER...If the Mideast has such an oil crises, then why and how can Emirates, Jet Airways,Qatar,etc all of the sudden start up these high end services,order large transport aircraft while commiting to what they invision , a very bright and prosperous future. Dubai, Doha,construction increase while touting world class ammenities, the state of the art luxury...only to be followed by the proliferation of city and general infrastructural growth all over...I'm quite sure they have realized you can't run 600,000 lb aircraft on sugar cane, and corn derivatives...I'm only speculating, they foresee now, their own need for future petroleum reserves and the rest of the world is going to have to eat crow...I highly doubt that the non renewable supply of fossil fuel is depleted or near depletion,as the very oil rich nations themselves are showing the world that their own requirements for petroleum will be on the rise.Our country better get a grip....j
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 4:57 pm

Quoting Prebennorholm (Reply 8):

On a 1,000 miles sector the difference between crude at $50 and $100 is some $30-35 per pax on a fairly well filled 737 or 320 plane. It doesn't make or break air traffic.

..that's huge given the thousands of flights/per week which meet that criteria.

Quoting Prebennorholm (Reply 8):
Fuel is a significant cost for airline companies. But it is often overrated as such.

30%-35% of costs for many carriers and its doubled the past year couple of years and you call that "overrated"?  confused 

Quoting Ikramerica (Reply 16):

which is why it will collapse just like it has in the past. when inflated prices are based on hysteria and hype, they crash. be it gold, oil, stocks real estate. we've seen stocks and real estate crash or slide, gold and oil are next...

On a Euro basis, its not as expensive..I would say $20 is based on fear/greed/speculation..maybe $25..tops...yes..that is a lot, but a bubble typically loses 50%-75% of its value, and that certainly isn't the case....

Quoting UnknownUser (Reply 18):
However, $$$9,000,000,000 is wayyyy to much.

...why?

Quoting WorldTraveler (Reply 19):

not to pile on, but UA did have the longest running and most expensive bankruptcy in US airline history

....and they did it during one of the worst periods in U.S. aviation history...your DL was fortunate in that it filed and came out of bankruptcy during a majour upswing...
"Up the Irons!"
 
DC8FanJet
Posts: 167
Joined: Sun Aug 27, 2006 9:25 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 5:18 pm

I think everyone was in so much of a hurry to "jump on United", that the entire point of the comments was
missed. All Jake Brace said was that, IF the economy goes entirely bad, and the airline traffic drops off,
United has some 100+ 737's that are PAID FOR, and thus, could be parked without financial penalty.

Perhaps it is time to reread the terms of posting on this site.........
 
ual777
Posts: 1497
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 5:45 pm

Quoting Prebennorholm (Reply 8):
On a 1,000 miles sector the difference between crude at $50 and $100 is some $30-35 per pax on a fairly well filled 737 or 320 plane. It doesn't make or break air traffic.

On long range flights the fuel price is more significant, simply because it costs a lot of fuel to transport all that fuel. On an 8,000 miles sector the difference would be more $400-500-ish.

Actually, the shorter the stage length, the WORSE it is in the long-term. In an 8 hour period, the long-haul aircraft is making 1 take-off and landing, while the 737 or A320 will be making 3-4 thus burning a lot more gas on take-off.
It is always darkest before the sun comes up.
 
bmacleod
Posts: 2498
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RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 6:27 pm

Parking aircraft is one option, though quite expensive as well. I'm assuming quite a few 744s will wind up in MZJ or Mojave. UA really must look at the long term - ordering aircraft that are more fuel efficient such as 787s, 748s or 773ERs.

I realize the wacky state their management team is in right now but these fellas have to pull up their sleeves sooner rather than later.  weightlifter 
The engine is the heart of an airplane, but the pilot is its soul.
 
Flighty
Posts: 7677
Joined: Thu Apr 05, 2007 3:07 am

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 6:39 pm

Quoting Bmacleod (Reply 46):
I'm assuming quite a few 744s will wind up in MZJ or Mojave.

I think so too. UA needs some 777s and possibly (as you say) 773ERs. But their worst 744 lines must surely be bleeding red ink right now. He is talking about parking 744s I think. Or, maybe 733s as well.
 
YULWinterSkies
Posts: 1266
Joined: Thu Jun 09, 2005 11:42 pm

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 7:15 pm

Quoting Phelpsie87 (Reply 1):
Not a big surprise...esp when UA was planning oil at a lower price.

Maybe they were not planning the $ at such a low rate... After all, oil is not that much more expensive north of the border...
When I doubt... go running!
 
Tan Flyr
Posts: 1566
Joined: Sat Aug 19, 2000 11:07 pm

RE: UA Exec-Oil Price Rise Could Cause Grounded Planes

Thu Nov 08, 2007 9:24 pm

Quoting DC8Fanjet (Reply 44):
United has some 100+ 737's that are PAID FOR, and thus, could be parked without financial penalty.

However, those might be the ones you would want to fly as they are "paid for"..IF UA has a clause in the leases to get out with XX days notice, they could opt to park some busses and free themselves of a lease payment. Just a hypothetical exercise.