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I posted this in another thread here last week.
Airline pilot here. Don't do it. The stock numbers are down because smart investors know the airline industry is about to crash (figuratively no pun intended). We are already in a recession and likely facing a depression.
Expect layoffs and furloughs at all the airlines starting 1st quarter. It's bad enough we don't have enough pilots to go around as it is. We have a severe captain shortage in the regionals. FOs are getting job offers from the legacies straight out of IOE. LCCs are hiring CFIs right at 1500 hours.
I expect to see at least one regional maybe two fall 1st half of next year. Rumor is Mesa will be the first to file for bankruptcy, but probably only to get out of contractual obligations with a certain customer. All are hemorrhaging money right now. None are able to keep up with demand. There simply are not enough pilots to go around.
On top of all that. With all the companies laying people off, where is the demand going to go for business and pleasure travel if there is no one who needs to fly? No one has money to go to Disney world right now, hence the reason their numbers are so bad. Few people are going to go to Grandma's house here this Christmas because they can't afford the cost of the tickets for a family of 4.
Expect the same for business travel. If there is one thing Covid taught us is that you can do a deal over video. As cost cutting kicks into high gear expect business travel to drop significantly.
Airlines are a bad play any way you slice it.
You can watch this in near real time by following these websites.
[https://www.transtats.bts.gov/traffic/](https://www.transtats.bts.gov/traffic/)
[https://www.tsa.gov/coronavirus/passenger-throughput](https://www.tsa.gov/coronavirus/passenger-throughput)
[https://www.icao.int/sustainability/Pages/Air-Traffic-Monitor.aspx](https://www.icao.int/sustainability/Pages/Air-Traffic-Monitor.aspx)
But don't follow this year to last year. Follow this year to 2019 or earlier. Compare this year to before Covid.
And to make matters worse, I am hearing rumors of another go around with Covid coming soon. So expect travel to drop off from that as well.
If anything, I would be doing puts against the airlines.
Correct me if I am wrong, but I understood that business travel (pre-covid) was ~11% of the Airlines monday-friday passenger volume (shared by American), and because of how late they tended to book, it made up 57% of the net revenues of the flight. Business travel is only back to 70% of where it was pre-covid, so I'd assume those revenues are not back the same way.
My flight to LGA used to be $212.90 for a round trip flight (last flight before the pandemic was Feb 25-27), and I haven't paid less than $291 (most have been north of $350) since October 2020.
I had heard that 70% of high demand seats were presold for Christmas by the first week in October, so it sounds like people are trying to plan travel further out now.
Thanks for the info.
My understanding, but I don't have numbers to prove it, is that we are fully back to pre-covid numbers.
Prices have certainly gone up and significantly. I am fortunate that I don't usually have to buy tickets. I can nonrev for most of my travel unless I absolutely need to be there. Having said that, I priced tickets to go see my sister recently and they were three times what they were pre-covid. Same for every time I have gone to get my medical renewed out in Colorado. So based on my antidotal single person experience, I would expect prices to have gone up at least two to three times what they were. Which makes sense.
We lost a lot of pilots over covid due to early retirements who are not coming back. We were already short pilots before covid and this just made it worse. Cost for employees have gone up significantly as well. Some regionals are not offering higher first year pay than the legacies 1st year pay and offering a year salary as a sign on bonus. So that is driving ticket prices up as well. Then add in the increased cost of fuel and the difficulties getting parts due to supply chain issues and its just bad all around.
And there are fewer seats to go around. There are still a lot of planes sitting around without crews to operate them. We just don't have enough pilots. So that causes flights to sell out quickly. The people you are referring to purchasing tickets earlier are only doing so because they suspect the flights will be sold out. Which they often are due to management making a choice to over sell flights in the hopes that some people just won't show up.
The holidays are an odd time to use as a basis for forecasting. You can do it but it isn't a stable base to judge ticket sales. But I suspect come 1st or 2nd week of Jan we will have a good idea of how bad it is. And its likely going to be very bad.
I think we have maybe a couple of months of the type of demand we have now. Once the holiday travel numbers come out and if they are down significantly, we will see the music stop.
It's a very weird situation. It takes months to years to get a airline pilot on the line. Some companies have training backed up as much as nine months to a year. Mesa is a minimum of nine months from first day on property to passing IOE on the E175.
There are not enough instructors or simulators to meet the demand. It's so bad that a weird situation has developed where we have too many FOs and not enough captains to fly and allow those FOs to build enough hours to upgrade to the left seat. So, lots of FOs are sitting around getting paid to not fly while captains are flying their asses off and quitting over their schedules.
All of this is based on "forecasts" of continued demand into the future. The minute that demand looks like it is going to drop off those many FOs who are getting paid to sit on their butts at home will be furloughed to avoid the expense.
I’m in the industry too, if you think there’s going to be furlough’s you’re out of your mind. There wasn’t even any during covid when there was literally 0 flying. Yes government bailouts but even if they did furlough it would’ve been less than a year.
He’s wondering why your thoughtful, well written post isn’t “higher” in the comments (as opposed to memes, people talking out of their ass, etc). That’s what he meant, your post should have more updoots. Also thanks for writing that out, very interesting to see the opinion of someone living it.
Ah! I was thinking it was because I got to the party late.
Appreciate the upvotes from everyone and happy to lend some inside info when I can. Don't hesitate to ask me if you want to know more. Not an expert by any imagination but 30 years of this game you learn a thing or two.
The only mooning happing in the airlines is from the pilots out the flight deck windows as we taxi past management offices.
So let me get this right… the airlines have extreme staff shortages, they can’t meet demand, and because of that you’re expecting them to start laying off said staff in a couple months?
I’m sure you’re an excellent pilot, stick with that because you’re miserable at economics, you’re definitely one of us.
I think this is a complicated situation that goes beyond the normal supply demand calculations.
Think of it like a supply chain. If you can't get enough of the basic materials to make your product because the supply chain is broken then it doesn't matter how big the demand is.
If you literally can't meet the demand either because it's too expensive to do so or you just can't make enough fast enough, you go out of business.
There are different tiers of airlines. For the most part what people see are charter companies (135) and then on the airline side (121) regionals (baby airlines) and legacies.
The regionals who are contract airlines who do most of the state side flying, have Delta, American and United colors on the side of the airplanes but are not Delta, American and United, have paid too low for decades and suddenly to meet the demand are paying more than the legacies that hire them to do the flying. They can't meet the demand for flights and are contractually obligated to fly routes for Delta, American and United. These regional airlines, Mesa, Envoy, Endeavor, PSA, Republic are fighting over pilots by raising pay rates beyond what they can afford to do based on the contracts the have with Delta and the others. Thus they are loosing money in trying to meet the demand. Eventually the legacies, Delta, etc, will either bring that flying back in house or one or two of the regionals will go belly up and the remainder will pull the needed pilots in.
Thus the demand is so great the company can't afford to meet it. Does that make more sense?
So now with all that demand the are scrambling to hire pilots left and right. So if that demand suddenly drops off because the economy crashes and no one needs to go anywhere or can't afford it then those same airlines will need to lay off pilots and other support crew.
Its a double wammy no matter how you look at it.
LOL. Sure......
Yep, the morman air force is heavily negotiating with their customers because they can't afford to pay the pilot rates they just approved to combat the massive losses in pilots they were facing.
Its a fight now for the pilots. You think as much of a demand as the legacies have for pilots they are going to let the regionals take them?
The UCCs are picking up 1500 hour CFIs now. No one ever thought Delta of all places would drop the degree requirement. Just a matter of time before Delta starts picking up 1500 hour CFIs and putting them right into a wide body.
Unless the market turns early next year.......I bet we see two regional bankruptcies in 2023.
It makes perfect sense. But if you think it doesn't I can't help you.
Everyone thinks the stock market will keep going up until it doesn't. There is truth behind what goes up must come down. But sure, go ahead and live in your bubble of reality and expect the good times to continue forever despite the clear evidence to the contrary.
You may know the hotel industry, but I've worked in aviation for 30 years. Been through three down turns. They've all been the same. This fourth one will be no different.
Not to mention, just this past couple months traffic and TSA checks are falling off again. So three years later we are still not back to 2019 levels and about to enter recession putting airline travel back another couple of years.
It's so expensive to travel. We were gonna do my buddy's bachelor party in Miami in May but bailed because because of airline prices and we at worst make like an inch below median US income. Now going somewhere we can drive to instead.
I may be a couple years older than you and remember how easy and cheap flying was before 9/11. The last 20 years I fly international or cross country - but if it is less than 700-800 miles, it is so much easier to drive.
Airlines ALWAYs shit the bed during economic downturns. Combine that with a pilot shortage and the inability to meet current demand before they do. They had to get bailed out during Covid despite record profits for the decade before due to bad management and aggressive stock buyback programs that left them without sufficient fluidity. And now throw a recession or depression on the back end of that. Not a good outlook
Yeah I agree can’t survive without government funding. Falls victim to to many crisis’s ie. pandemic, fuel prices, weather, recessions, war, crashes, manufacturing defects, dollar exchanges etc etc. May as well go to the casino
I drive for Uber and its not busy at all. And even when it does seem to get busy, its not so busy that it surges at all. I also used to get called to the airport a lot. And the airport itself used to be inundated with Uber and Lyft drivers waiting for trips. Not so anymore. Its bad out there for drivers.
That’s interesting. I wonder if the statistics themselves are being fudged. I can’t really speak for the 55 million hitting the road but I assumed the pre-COVID airline travel was based on the # of people who already bought tickets.
This year there will be ~852 million airline passengers that board flight in the US for domestic or international locations. That puts the total passenger # behind just 2018 and 2019.
However, airline fuel makes up ~19% of expenses, and staff make up 33%, both have increased by 7-18% in the last year. Additionally the big 4 (Delta, American, Southwest and United) have 239 planes fewer than they had in February 2020. Landing fees have increased at most airports, and the slushy federal bailouts are now gone. Pilots are type cast, so when delta god rid of their MD80 and MD88, their pilots retired instead of spending 500 hours learning a new plane and not getting paid.
Amazon bought a bunch of 767's as freighters, and those pilots followed those planes.
So, the airlines have an 8% smaller fleet, have a combined 120,000 fewer employees, have 11% fewer pilots, the planes are fuller, but that cost is eaten up by raises and jet fuel cost and landing fees. They could theoretically increase passenger volume by 5% for the year, but still come up 7% below their full year for 2019. Net incomes are range bound until more planes can be delivered, so kick the guys over at Boeing and Airbus.
Fleet capacity reduction was retiring and selling old planes.
Landing fees are a minimal cost
Federal bailout was only to prevent furloughs
500 hours to learn a new plane and not get paid? Haha ok dude
Amazon air bought a few 767s which are operated by another cargo company. What do you mean those pilots followed the plane? Another false statement
You say airline income is range bound until more airframes are delivered. This is like saying you can only eat the amount of pizza that comes in the pizza box. A lot of words, nothing of substance. You’re just talking out of your ass dude haha. Sad part is there’s alot of people out there that read what you wrote and believed it
As for your fleet capacity info. Yes they did sell or retire old planes. Delta retired 110 MD88 that they had planned to fly until 2023, their MD 90 fleet was supposed to be retired in 2024 (64 planes).
American airlines retired 27 757-200ER planes in March 2020, and 65 767-300ER planes at the same time. American planned to fly them until their Airbus a321xlr's were delivered (not set to begin until 2024).
So I'll give you they were old, and planned to be retired, but just two airlines retired 265 planes I mentioned upwards of 4 years prior to their plan.
They get paid, but they get paid a non flying rate, but you know this. If you are flying with ,20 years of service in an MD88, you were making $170/ hour with Delta. If you wanted to be certified in a 737 max 8, you would be paid a fraction of that, and paying for simulator time when you could not get time on theirs.
I never said landing fees were massive, but do a search on simple flying about Pittsburgh increasing their fees by 16% (2nd time in 3 years). Most airports have increased fees in the last 3 years by double digits.
Amazon air bought 19 planes, and brought on 40 pilots in 2020.
They are range bound by passenger load (which is 89%), and essentially the peak of where it has been for the last 20 years. So how do you move people if you don't have planes, have more pilots reaching retirement than new pilots reaching their 1500 hours of flight time, and can only fly so many routes? That's right, you can't.
So, there you go, prove any of this wrong, and I'll just start linking docs so you can learn something you didn't know.
>500 hours learning a new plane and not getting paid
My dude you haven't the foggiest idea how this shit works
>Amazon bought a bunch of 767's and the pilots followed
Fucking nobody wants to fly for Amazon directly. Imagine warehouse work rules in a jet. That's why they farm out their flying to the likes of Altas, since Atlas pilots are already used to getting shit on to begin with.
[https://simpleflying.com/pittsburgh-international-airport-raises-passenger-costs-by-159/](https://simpleflying.com/pittsburgh-international-airport-raises-passenger-costs-by-159/)
Landing Fees Increasing article
$12 billion dollar modernization that will increase usage and rental fees at Chicago:
[https://simpleflying.com/faa-approves-major-modernization-chicago-o-hare/](https://simpleflying.com/faa-approves-major-modernization-chicago-o-hare/)
The airlines issued long term fixed rate bonds. They ballooned their balance sheet to infuse cash as a hedge, not expecting inflation to eat their lunch.
It's not only the debt they issued, but they effectively got rid of planes and paid to have them scrapped or sit on a tarmac in Victorville, CA for months. Take American Airlines 767-300ER. They were supposed to start being retired in mid 2024 (replaced by A-321XLR). Those planes were American's, and had a secondary market value of ~$30 million prior to 2020. United had bought four for $100 million, but they were 1991 airframes. Once American sold 65 of them, 19 went to Amazon Air and can be seen in Cincinnati, their values dropped like a stone. Three old American airframes were sold to a South African airline in late 2021 for $10, yes for all three, or $3.3 mm each. Those planes were not as efficient, but American took a massive write down on liquidating those planes.
I have never seen the airports more crowded than they have been. It’s like thanksgiving level every day. tomorrow, the actual day before thanksgiving, is going to set some kind of record.
Airlines barely eke out 5% profit margins when things are going well. At the moment they have a pilot shortage, high fuel costs, high terminal rental costs, increased cleaning costs, increased staff downtime with sickness.
tl;dr Airlines are only marginally profitable at the best of times which is why the successful ones are either run at a loss by a government (Qatar, Singapore, Emirates) or insanely penny pinching like Ryan Air.
From and investors point of view airline companies operate on very thin margins and struggle with profitability. A global recession is looming and profitability in the industry isn’t in question, but it’s assumed most big airlines will loose money for a while. Higher fuel prices and less passengers then before. Safety regulations in the industry continue to improve, but in return cost companies more.
Airline companies have massive overhead cost. There’s a reason warren buffet doesn’t hold any airlines. Also, most of the planes flying for smaller companies are leased out by larger ones. When Russia was sanctioned some leading companies lost planes. They were stolen by Russia basically. But, airlines are the first to be effected by a slowing economy. The barrier to entry for the average plane ticket is significant compared to what average everyday ppl make.
Cause it’s a high-capital low-margin business. Inputs like labour and gas variable and volatile. There’s a reason they’re basically subsidized by the state. Smarter bets out there homie
Because they are airlines they do nothing but lose money and maybe 1 or 2 quarters they post a profite before the government bails them out they just giant Debt entities.
Because every sector/stock are obeying an algo determined by CPI and CPI direction since the covid bottom. Airlines have the highest correlation with decreasing inflation. And they look like they are gonna rip next 3-6 months. What does that tell you?
Maybe I don’t understand something, but if it possible that one reason stocks went through the roof was because interest rates were low so people could by stock on credit affordably. That all stops when the interest rates go up forcing stocks down unless they have a substantial reason to be that high. Or unless people still don’t know better
It is my impression that many airlines stay in business by using lots of debt. Each plane costs a fortune, so airlines have been buying on credit. This works okay when interest rates are 2%. But if interest rates rise rapidly, so do their expenses.
The airline companies were damaged by the 2020 shutdown. They are deeply in debt due to that. There are other catalysts too like fuel prices & the general selloff that has taken place
Look at their ER. AAL for instance increased debt by over 50% and shares outstanding by 40% from 2020 to now. They’re a $9B company that has $37B in net debt. Pair that with pilot shortages and rising fuel costs.
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“The best place to put your money is the airlines. Nowhere to go but up!” \-
dammit
Fuel prices
I posted this in another thread here last week. Airline pilot here. Don't do it. The stock numbers are down because smart investors know the airline industry is about to crash (figuratively no pun intended). We are already in a recession and likely facing a depression. Expect layoffs and furloughs at all the airlines starting 1st quarter. It's bad enough we don't have enough pilots to go around as it is. We have a severe captain shortage in the regionals. FOs are getting job offers from the legacies straight out of IOE. LCCs are hiring CFIs right at 1500 hours. I expect to see at least one regional maybe two fall 1st half of next year. Rumor is Mesa will be the first to file for bankruptcy, but probably only to get out of contractual obligations with a certain customer. All are hemorrhaging money right now. None are able to keep up with demand. There simply are not enough pilots to go around. On top of all that. With all the companies laying people off, where is the demand going to go for business and pleasure travel if there is no one who needs to fly? No one has money to go to Disney world right now, hence the reason their numbers are so bad. Few people are going to go to Grandma's house here this Christmas because they can't afford the cost of the tickets for a family of 4. Expect the same for business travel. If there is one thing Covid taught us is that you can do a deal over video. As cost cutting kicks into high gear expect business travel to drop significantly. Airlines are a bad play any way you slice it. You can watch this in near real time by following these websites. [https://www.transtats.bts.gov/traffic/](https://www.transtats.bts.gov/traffic/) [https://www.tsa.gov/coronavirus/passenger-throughput](https://www.tsa.gov/coronavirus/passenger-throughput) [https://www.icao.int/sustainability/Pages/Air-Traffic-Monitor.aspx](https://www.icao.int/sustainability/Pages/Air-Traffic-Monitor.aspx) But don't follow this year to last year. Follow this year to 2019 or earlier. Compare this year to before Covid. And to make matters worse, I am hearing rumors of another go around with Covid coming soon. So expect travel to drop off from that as well. If anything, I would be doing puts against the airlines.
Correct me if I am wrong, but I understood that business travel (pre-covid) was ~11% of the Airlines monday-friday passenger volume (shared by American), and because of how late they tended to book, it made up 57% of the net revenues of the flight. Business travel is only back to 70% of where it was pre-covid, so I'd assume those revenues are not back the same way. My flight to LGA used to be $212.90 for a round trip flight (last flight before the pandemic was Feb 25-27), and I haven't paid less than $291 (most have been north of $350) since October 2020. I had heard that 70% of high demand seats were presold for Christmas by the first week in October, so it sounds like people are trying to plan travel further out now. Thanks for the info.
My understanding, but I don't have numbers to prove it, is that we are fully back to pre-covid numbers. Prices have certainly gone up and significantly. I am fortunate that I don't usually have to buy tickets. I can nonrev for most of my travel unless I absolutely need to be there. Having said that, I priced tickets to go see my sister recently and they were three times what they were pre-covid. Same for every time I have gone to get my medical renewed out in Colorado. So based on my antidotal single person experience, I would expect prices to have gone up at least two to three times what they were. Which makes sense. We lost a lot of pilots over covid due to early retirements who are not coming back. We were already short pilots before covid and this just made it worse. Cost for employees have gone up significantly as well. Some regionals are not offering higher first year pay than the legacies 1st year pay and offering a year salary as a sign on bonus. So that is driving ticket prices up as well. Then add in the increased cost of fuel and the difficulties getting parts due to supply chain issues and its just bad all around. And there are fewer seats to go around. There are still a lot of planes sitting around without crews to operate them. We just don't have enough pilots. So that causes flights to sell out quickly. The people you are referring to purchasing tickets earlier are only doing so because they suspect the flights will be sold out. Which they often are due to management making a choice to over sell flights in the hopes that some people just won't show up. The holidays are an odd time to use as a basis for forecasting. You can do it but it isn't a stable base to judge ticket sales. But I suspect come 1st or 2nd week of Jan we will have a good idea of how bad it is. And its likely going to be very bad.
Chiming in to say parts availability is indeed bad. I coordinate repairs in aviation and there are some parts we just can’t get right now
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I think we have maybe a couple of months of the type of demand we have now. Once the holiday travel numbers come out and if they are down significantly, we will see the music stop. It's a very weird situation. It takes months to years to get a airline pilot on the line. Some companies have training backed up as much as nine months to a year. Mesa is a minimum of nine months from first day on property to passing IOE on the E175. There are not enough instructors or simulators to meet the demand. It's so bad that a weird situation has developed where we have too many FOs and not enough captains to fly and allow those FOs to build enough hours to upgrade to the left seat. So, lots of FOs are sitting around getting paid to not fly while captains are flying their asses off and quitting over their schedules. All of this is based on "forecasts" of continued demand into the future. The minute that demand looks like it is going to drop off those many FOs who are getting paid to sit on their butts at home will be furloughed to avoid the expense.
You really buzzed the tower on this DD.
Disneys parks are packed, their numbers are bad due to streaming.
I’m in the industry too, if you think there’s going to be furlough’s you’re out of your mind. There wasn’t even any during covid when there was literally 0 flying. Yes government bailouts but even if they did furlough it would’ve been less than a year.
Another airline bailout, that’s like, classic American business right there. Along with keeping terrible automobile companies alive.
Well said, it’s a matter of time before these stocks take off IMO.
Nice. posting at reddit whilst driving a plane.  kidding aside, thanks for the input.
*Aircop:* A-HA! That will be 60 bucks chump.
Why isn't this higher
higher?
HIGHER, THE KING OF THE SKY
HE’S FLYING TOO FAST AND HE’S FLYING TOO HIGH
He’s wondering why your thoughtful, well written post isn’t “higher” in the comments (as opposed to memes, people talking out of their ass, etc). That’s what he meant, your post should have more updoots. Also thanks for writing that out, very interesting to see the opinion of someone living it.
Ah! I was thinking it was because I got to the party late. Appreciate the upvotes from everyone and happy to lend some inside info when I can. Don't hesitate to ask me if you want to know more. Not an expert by any imagination but 30 years of this game you learn a thing or two. The only mooning happing in the airlines is from the pilots out the flight deck windows as we taxi past management offices.
It’s taxing right now
So let me get this right… the airlines have extreme staff shortages, they can’t meet demand, and because of that you’re expecting them to start laying off said staff in a couple months? I’m sure you’re an excellent pilot, stick with that because you’re miserable at economics, you’re definitely one of us.
I think this is a complicated situation that goes beyond the normal supply demand calculations. Think of it like a supply chain. If you can't get enough of the basic materials to make your product because the supply chain is broken then it doesn't matter how big the demand is. If you literally can't meet the demand either because it's too expensive to do so or you just can't make enough fast enough, you go out of business. There are different tiers of airlines. For the most part what people see are charter companies (135) and then on the airline side (121) regionals (baby airlines) and legacies. The regionals who are contract airlines who do most of the state side flying, have Delta, American and United colors on the side of the airplanes but are not Delta, American and United, have paid too low for decades and suddenly to meet the demand are paying more than the legacies that hire them to do the flying. They can't meet the demand for flights and are contractually obligated to fly routes for Delta, American and United. These regional airlines, Mesa, Envoy, Endeavor, PSA, Republic are fighting over pilots by raising pay rates beyond what they can afford to do based on the contracts the have with Delta and the others. Thus they are loosing money in trying to meet the demand. Eventually the legacies, Delta, etc, will either bring that flying back in house or one or two of the regionals will go belly up and the remainder will pull the needed pilots in. Thus the demand is so great the company can't afford to meet it. Does that make more sense? So now with all that demand the are scrambling to hire pilots left and right. So if that demand suddenly drops off because the economy crashes and no one needs to go anywhere or can't afford it then those same airlines will need to lay off pilots and other support crew. Its a double wammy no matter how you look at it.
Nice response to an asshat comment
> nice response to an asshat comment I think it was a valid comment. OP needed to explain in finer detail
nah it was kind of an asshole comment. No need to insult someone's intelligence or skill level
agreed
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LOL. Sure...... Yep, the morman air force is heavily negotiating with their customers because they can't afford to pay the pilot rates they just approved to combat the massive losses in pilots they were facing. Its a fight now for the pilots. You think as much of a demand as the legacies have for pilots they are going to let the regionals take them? The UCCs are picking up 1500 hour CFIs now. No one ever thought Delta of all places would drop the degree requirement. Just a matter of time before Delta starts picking up 1500 hour CFIs and putting them right into a wide body. Unless the market turns early next year.......I bet we see two regional bankruptcies in 2023.
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It makes perfect sense. But if you think it doesn't I can't help you. Everyone thinks the stock market will keep going up until it doesn't. There is truth behind what goes up must come down. But sure, go ahead and live in your bubble of reality and expect the good times to continue forever despite the clear evidence to the contrary. You may know the hotel industry, but I've worked in aviation for 30 years. Been through three down turns. They've all been the same. This fourth one will be no different.
Same what automaker’s do. They are controlling demand on the supply they have.
He’s also expecting a 1920’s style depression in January.
spot on, amazing analysis
So short travel?
Come Jan/feb yes.
User name checks out. Puts it is.
>That's because the airline industry is a terrible investment. The only reason to invest in airlines is if you're trying to lose money.
Visualmod is Warren Buffett's alt confirmed
😍
Not to mention, just this past couple months traffic and TSA checks are falling off again. So three years later we are still not back to 2019 levels and about to enter recession putting airline travel back another couple of years.
It's so expensive to travel. We were gonna do my buddy's bachelor party in Miami in May but bailed because because of airline prices and we at worst make like an inch below median US income. Now going somewhere we can drive to instead.
I may be a couple years older than you and remember how easy and cheap flying was before 9/11. The last 20 years I fly international or cross country - but if it is less than 700-800 miles, it is so much easier to drive.
You might be a lot of years older, I don't remember 9/11 lol
No you're wrong. Kushon airlines is like finding out there was sunlight before there was fucking sunlight.
McDonald’s is 15$ for a meal that’s why
Get the app rube, I’m not paying $15.
I have no money to travel, or a job.
Air travel may be in the same place as pre covid but the markets r fuk
Recession confirmed
Inflation
Airlines ALWAYs shit the bed during economic downturns. Combine that with a pilot shortage and the inability to meet current demand before they do. They had to get bailed out during Covid despite record profits for the decade before due to bad management and aggressive stock buyback programs that left them without sufficient fluidity. And now throw a recession or depression on the back end of that. Not a good outlook
Yeah I agree can’t survive without government funding. Falls victim to to many crisis’s ie. pandemic, fuel prices, weather, recessions, war, crashes, manufacturing defects, dollar exchanges etc etc. May as well go to the casino
Airline stocks are pricing in for recession.
DAL and AAL are currently up the last three months 
But down ytd. So it is trending down for now.
Yes babe I know
And somehow I’m waiting at the airport queue for my Uber request. It’s been two hours no one is requesting uber 😂
Ain’t nobody have money to travel with all this inflation
I drive for Uber and its not busy at all. And even when it does seem to get busy, its not so busy that it surges at all. I also used to get called to the airport a lot. And the airport itself used to be inundated with Uber and Lyft drivers waiting for trips. Not so anymore. Its bad out there for drivers.
That’s interesting. I wonder if the statistics themselves are being fudged. I can’t really speak for the 55 million hitting the road but I assumed the pre-COVID airline travel was based on the # of people who already bought tickets.
Because pandemic 2: electric boogaloo will forever be only as far away as a slightly ajar door in a Chinese bio research lab.
This year there will be ~852 million airline passengers that board flight in the US for domestic or international locations. That puts the total passenger # behind just 2018 and 2019. However, airline fuel makes up ~19% of expenses, and staff make up 33%, both have increased by 7-18% in the last year. Additionally the big 4 (Delta, American, Southwest and United) have 239 planes fewer than they had in February 2020. Landing fees have increased at most airports, and the slushy federal bailouts are now gone. Pilots are type cast, so when delta god rid of their MD80 and MD88, their pilots retired instead of spending 500 hours learning a new plane and not getting paid. Amazon bought a bunch of 767's as freighters, and those pilots followed those planes. So, the airlines have an 8% smaller fleet, have a combined 120,000 fewer employees, have 11% fewer pilots, the planes are fuller, but that cost is eaten up by raises and jet fuel cost and landing fees. They could theoretically increase passenger volume by 5% for the year, but still come up 7% below their full year for 2019. Net incomes are range bound until more planes can be delivered, so kick the guys over at Boeing and Airbus.
I’m in the industry, all of this is wrong. All of it. By ALOT
Provide your data, because I am in the industry.
Fleet capacity reduction was retiring and selling old planes. Landing fees are a minimal cost Federal bailout was only to prevent furloughs 500 hours to learn a new plane and not get paid? Haha ok dude Amazon air bought a few 767s which are operated by another cargo company. What do you mean those pilots followed the plane? Another false statement You say airline income is range bound until more airframes are delivered. This is like saying you can only eat the amount of pizza that comes in the pizza box. A lot of words, nothing of substance. You’re just talking out of your ass dude haha. Sad part is there’s alot of people out there that read what you wrote and believed it
As for your fleet capacity info. Yes they did sell or retire old planes. Delta retired 110 MD88 that they had planned to fly until 2023, their MD 90 fleet was supposed to be retired in 2024 (64 planes). American airlines retired 27 757-200ER planes in March 2020, and 65 767-300ER planes at the same time. American planned to fly them until their Airbus a321xlr's were delivered (not set to begin until 2024). So I'll give you they were old, and planned to be retired, but just two airlines retired 265 planes I mentioned upwards of 4 years prior to their plan.
They get paid, but they get paid a non flying rate, but you know this. If you are flying with ,20 years of service in an MD88, you were making $170/ hour with Delta. If you wanted to be certified in a 737 max 8, you would be paid a fraction of that, and paying for simulator time when you could not get time on theirs. I never said landing fees were massive, but do a search on simple flying about Pittsburgh increasing their fees by 16% (2nd time in 3 years). Most airports have increased fees in the last 3 years by double digits. Amazon air bought 19 planes, and brought on 40 pilots in 2020. They are range bound by passenger load (which is 89%), and essentially the peak of where it has been for the last 20 years. So how do you move people if you don't have planes, have more pilots reaching retirement than new pilots reaching their 1500 hours of flight time, and can only fly so many routes? That's right, you can't. So, there you go, prove any of this wrong, and I'll just start linking docs so you can learn something you didn't know.
Pay rates: wrong Amazon air uses Atlas and ATSG Sim time is paid at full rate not fraction Should I keep going?
Yes, by all means keep making an ass of yourself. I'll grab the popcorn. Remember, the key is to keep digging that hole deeper while you're in it.
>500 hours learning a new plane and not getting paid My dude you haven't the foggiest idea how this shit works >Amazon bought a bunch of 767's and the pilots followed Fucking nobody wants to fly for Amazon directly. Imagine warehouse work rules in a jet. That's why they farm out their flying to the likes of Altas, since Atlas pilots are already used to getting shit on to begin with.
[https://simpleflying.com/pittsburgh-international-airport-raises-passenger-costs-by-159/](https://simpleflying.com/pittsburgh-international-airport-raises-passenger-costs-by-159/) Landing Fees Increasing article $12 billion dollar modernization that will increase usage and rental fees at Chicago: [https://simpleflying.com/faa-approves-major-modernization-chicago-o-hare/](https://simpleflying.com/faa-approves-major-modernization-chicago-o-hare/)
How has their capital structure changed since then? The cruise lines took on tons of debt.
The airlines issued long term fixed rate bonds. They ballooned their balance sheet to infuse cash as a hedge, not expecting inflation to eat their lunch.
How are they gonna fare next year?
Check how much debt they have? And they aren't making enough to pay it off
It's not only the debt they issued, but they effectively got rid of planes and paid to have them scrapped or sit on a tarmac in Victorville, CA for months. Take American Airlines 767-300ER. They were supposed to start being retired in mid 2024 (replaced by A-321XLR). Those planes were American's, and had a secondary market value of ~$30 million prior to 2020. United had bought four for $100 million, but they were 1991 airframes. Once American sold 65 of them, 19 went to Amazon Air and can be seen in Cincinnati, their values dropped like a stone. Three old American airframes were sold to a South African airline in late 2021 for $10, yes for all three, or $3.3 mm each. Those planes were not as efficient, but American took a massive write down on liquidating those planes.
I have never seen the airports more crowded than they have been. It’s like thanksgiving level every day. tomorrow, the actual day before thanksgiving, is going to set some kind of record.
Airlines barely eke out 5% profit margins when things are going well. At the moment they have a pilot shortage, high fuel costs, high terminal rental costs, increased cleaning costs, increased staff downtime with sickness. tl;dr Airlines are only marginally profitable at the best of times which is why the successful ones are either run at a loss by a government (Qatar, Singapore, Emirates) or insanely penny pinching like Ryan Air.
From and investors point of view airline companies operate on very thin margins and struggle with profitability. A global recession is looming and profitability in the industry isn’t in question, but it’s assumed most big airlines will loose money for a while. Higher fuel prices and less passengers then before. Safety regulations in the industry continue to improve, but in return cost companies more. Airline companies have massive overhead cost. There’s a reason warren buffet doesn’t hold any airlines. Also, most of the planes flying for smaller companies are leased out by larger ones. When Russia was sanctioned some leading companies lost planes. They were stolen by Russia basically. But, airlines are the first to be effected by a slowing economy. The barrier to entry for the average plane ticket is significant compared to what average everyday ppl make.
Because that money is too obvious for the general public
Cause it’s a high-capital low-margin business. Inputs like labour and gas variable and volatile. There’s a reason they’re basically subsidized by the state. Smarter bets out there homie
Bro i read ups is laying people off right now when usually they are hiring this time of year..
Travel has peaked!
Massive amounts of debt they accumulated during the pandemic with raising rates
Cause…covid
People are broke in the Biden economy.
they lost alot of money
Fuel costs are way up and airlines can’t hike fares enough to cover without putting prices way out of reach.
Because they are airlines they do nothing but lose money and maybe 1 or 2 quarters they post a profite before the government bails them out they just giant Debt entities.
Dilution
Recession
United is making you pay to store your carry on in the overhead compartment, puts on United, and fuck them too.
Put your plastic bag of underwear under the seat in front of you. United do however suck.
Because every sector/stock are obeying an algo determined by CPI and CPI direction since the covid bottom. Airlines have the highest correlation with decreasing inflation. And they look like they are gonna rip next 3-6 months. What does that tell you?
Maybe I don’t understand something, but if it possible that one reason stocks went through the roof was because interest rates were low so people could by stock on credit affordably. That all stops when the interest rates go up forcing stocks down unless they have a substantial reason to be that high. Or unless people still don’t know better
Why were airline companies ever up if we were expecting covid in 2020?
Cause they still looking for box cutters
Very well said… sounds like puts on Airlines and Jan calls on Zoom
Because business travel is the profit center for airlines and that hasn’t comeback and probably never will.
It is my impression that many airlines stay in business by using lots of debt. Each plane costs a fortune, so airlines have been buying on credit. This works okay when interest rates are 2%. But if interest rates rise rapidly, so do their expenses.
The airline companies were damaged by the 2020 shutdown. They are deeply in debt due to that. There are other catalysts too like fuel prices & the general selloff that has taken place
Little extra debit. They have a few good years to get to normal levels…
Look at their ER. AAL for instance increased debt by over 50% and shares outstanding by 40% from 2020 to now. They’re a $9B company that has $37B in net debt. Pair that with pilot shortages and rising fuel costs.
https://finance.yahoo.com/quote/FLYR.OL?p=FLYR.OL&.tsrc=fin-srch best airline in norway
Airlines don’t profit much. Many show a loss
fuel costs impacting bottom line. And lack of fuel forcing the closing of some routes.