Reply #3: fuel prices are crucial to airlines [View All]

Anytime fuel prices go up the airlines are screwed. They negotiate fuel contracts to try to lock in a favorable price, but the oil companies never let those contracts go very far out into the future. What is a big windfall for the oil companies is a big tailspin for airlines.

Most airlines were also leveraged to the hilt BEFORE 9/11. The reason American is not in bankrupcy is that they were only leveraged 65% or so prior to 9/11. Newer,leaner carriers like Southwest and Jet Blue are also better off. Even so, the airline business is an AWFUL business to be in. High costs. Highly sensitive to rising fuel costs. Lots of expensive gov't regulation.