Airlines in the U.S. are losing $34 million per day. Losses for the year stand at about $3.1 billion, twice as big as last years. Yet the real horror is that the Wall Street Journal reports that several airline CEOs say this may actually be a peak in the economic cycle for them!
Revenue was up 5 in the first quarter, passenger traffic rose 8.5%–and for the ten largest airlines planes were three quarters full. “This is near the peak, if not the peak,” said Gary Kelly, Chief Executive of Southwest.
Yet airline investors like hedge funds, private equity groups and suppliers keep pumping in more money, and this keeps loss-plagued planes flying, forcing everyone to price below cost. “This industry is, essentially, a giant charity. said John D. Owen, CFO of JetBlue.
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