Storm warnings posted around a region are one thing, but when the red danger flags go up coast to coast, it’s time to be very careful about how much sail you have exposed to the gathering winds. So it is with the airlines of the US. As the price of fuel stays well above the $105 a barrel level, or about $3.50 a gallon, something’s got to change, warn three of the leaders of the largest airlines. Delta’s Richard Anderson at the end of the week warned of dramatic changes at the airline, and said details were on the way, promising “a comprehensive plan we'll be rolling out in to the changes in the marketplace.” At the same time that Anderson issued his dire warning from Atlanta, Continental’s Larry Kellner in Houston was also telling people to be ready for changes. “If these (oil) prices continue, we will have to make some tough decisions to make sure the size of our network is right for a world with fuel at such astronomical rates.” Their statements follow a warning by Doug Steenland of Northwest Airlines last week that oil at these levels was “a budget buster” for his and other airlines. None of the chiefs detailed the next step beyond suggesting network trims or fleet cutbacks, but Steenland repeated the widespread belief that consolidation is just a matter of time.
Some airlines will have executives speaking Tuesday at a New York investors conference; we'll be listening carefully as we watch to see if the US majors' latest fare increase sticks.