Thousand point spikes and drops are enough to make my stomach churn. Since September 12, the Dow Jones Industrial Average has only had three days where the close at the end of the day was less than 100 points difference from the opening, and even on those days the market swung wildly during trading. All this volatility could be bad for business and bad for backlogs.
With the global economy [insert perilous sounding metaphor], consumers are taking a more conservative approach with their finances. Americans are already cutting back on traveling, shopping and eating out to save where they can. With less movement of goods and people, energy costs will begin to drop with the reduced demand. In just the last two weeks, the price at the pump fell 36 cents, the steepest drop ever.
Which brings me to a comment made two weeks ago by Boeing CEO Jim McNerney:
Did the pain of $140 forever impress upon airlines the need for new fuel efficient aircraft? Or has the pain subsided as capacity cuts have given way to a healthy influx of cash?
The Seattle Post-Intelligencer identified a 'triple threat' to Boeing that included the on-going strike, 787 delays and an inability for its customers to secure financing. The first three are accurate representations for Boeing, but a fourth threat is one that could strike at Airbus, Bombardier and Embraer as well.
How low and for how long does oil have to remain cheap for backlogs to feel the pain? If airlines are able to operate profitably without new fuel-efficient aircraft, does it still make sense to buy new equipment?
With the global economy [insert perilous sounding metaphor], consumers are taking a more conservative approach with their finances. Americans are already cutting back on traveling, shopping and eating out to save where they can. With less movement of goods and people, energy costs will begin to drop with the reduced demand. In just the last two weeks, the price at the pump fell 36 cents, the steepest drop ever.
Which brings me to a comment made two weeks ago by Boeing CEO Jim McNerney:
Our airline customers already are struggling to operate profitably under volatile and high fuel prices. A reduction in business and leisure travel would further damage their fragile health and potentially impact the sales of our airplanes and services. However, the flip side of the high fuel price coin is that demand in the market for our fuel-efficient new airplanes remains high, and we have seen few order deferrals or cancellations. [Emphasis mine]Mr. McNerney is absolutely right, but what happens if the other side of the coin is wiped clean? What if the high fuel price is no longer a factor?
Did the pain of $140 forever impress upon airlines the need for new fuel efficient aircraft? Or has the pain subsided as capacity cuts have given way to a healthy influx of cash?
The Seattle Post-Intelligencer identified a 'triple threat' to Boeing that included the on-going strike, 787 delays and an inability for its customers to secure financing. The first three are accurate representations for Boeing, but a fourth threat is one that could strike at Airbus, Bombardier and Embraer as well.
How low and for how long does oil have to remain cheap for backlogs to feel the pain? If airlines are able to operate profitably without new fuel-efficient aircraft, does it still make sense to buy new equipment?
on October 14, 2008 10:32 AM | Reply
I absolutly concur with your analysis of the situation with respect to airlines and the fact that they need to find different alternatives for powering their aircraft.
I would also point out that the ever increasing consortium of finger pointers that say the airline industry is the major (insert your own adjective and/or adverb or #!%&*) contributor to global warming is not relaying the fact or maybe they are not aware that for each 42 gallon barrel of crude oil that is pumped out of the ground that only 4.1 gallons of Jet Fuel is produced. Here are the facts.
gasoline 19.5
distillate fuel oil
(Includes both home heating oil and diesel fuel) 9.2
kerosene-type jet fuel 4.1
residual fuel oil
(Heavy oils used as fuels in industry, marine transportation and for electric power generation) 2.3
liquefied refinery gasses 1.9
still gas 1.9
coke 1.8
asphalt and road oil 1.3
petrochemical feedstocks 1.2
lubricants 0.5
kerosene 0.2
other 0.3
Figures are based on 1995 average yields for U.S. refineries. One barrel contains 42 gallons of crude oil. The total volume of products made is 2.2 gallons greater than the original 42 gallons of crude oil. This represents "processing gain."
It would appear to me that the finger pointers that drove their autos to their last demonstration at the airport should have ridden their mopeds (the mo they pedal the faster they will go)