Airlines Worried: Fewer Cheeks In Seats
STEVE INSKEEP, host:
As you might have guessed automaker stock prices are falling. Airlines stocks were also taking a beating. In the last few days, investors have been bailing out of shares and big carriers and their lower cost competitors. NPR's Wade Goodwyn reports.
WADE GOODWYN: The nation's airlines are suffering from two problems: passenger levels are dropping and the amount of money the airlines are making off the people who are on their planes is falling too. Southwest Airlines said traffic was down 6 percent in February. Continental's traffic was off 13 percent; both leisure and business travel is off, but especially business travel. And that's where the real money is. Take the traffic between New York and London, for example. Thousands of financial industry executives aren't flying back and forth anymore. No reason. No business. Now take the New York to London route and multiply it times a 100 and you have the industry's current situation.
In addition, the fuel hedges the carriers purchased at triple digit prices last year are mostly still in effect. So the airlines aren't getting the full benefit of the drop in oil prices. But as the year progresses and those high price deals end, the airlines should be able to purchase new fuel hedges in the $50 to $60 range. Then when the economy begins to recuperate, the airlines will be positioned to make a profit. But all indications are that is going to be a long journey to that destination.
Wade Goodwyn, NPR News, Dallas.
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