How To Prevent Destruction of Airline Industry: Non-Profit VerticalOil Company

Mr. Travel wrote:

Second, airlines already have the financial mechanism to control the price
of fuel so it is predictable. It's called hedging. Southwest uses it to
great advantage over its competitors. The others just haven't learned.


Or they just 'gambled' the wrong way.


That is an excellent way of putting it.

Not quite. Hedging requires liquidity/credit in order to ensure that
the airline will have the cash to buy the fuel at the contract price
when the contract expires.

Southwest has a great financial situation and it is easy for it to prove
it will have sufficient cash reserves to cover its fuelk contracts 2
years down the road. (it currently has the majority of its fuel needs
hedged at $55/barrel for the next couple of years).

Alitalia cannot buy any hedges since it doesn't have enough cash and
nobody would trust Alitalia to be in existance 3 months down the road
let alone 2 years.


UA, having emerged from bankrupcy, was able to start hedging but only a
bit, and its hedges give it fuel at $85 barrel, but only for a small
portion of its total fuel needs.

The year before declaring bankrucpy, Delta sold its fuel hedges to
Southwest (just before the price of fuel started to rocket past the $30
mark). Delta no longer had the liquidity to sustain those hedges amd
needed the cash. (of course, this came back to haunt DL when the price
of oil started its phenomenal rise past the $30 mark and beyond).


If your financial condition isn't good, you cannot get hedges, and
cannot necessarily hold the hedges you already have because they tie up
cash you have.

Mr. Travel wrote:

Ethanol is an issue because it competes with the global food supply

I am quite suspect of what is going on now. How come the price of food
is shooting up all of a sudden, without warning and "they" blame it on
ethanol ???? I suspect the oil industry, wanbting to protecttheir turf,
may have managed this PR campaign to discredit bio-fuels.

There is no way that ethanol production would have suddently increased
so dramatically that the stuff used for it would have resulted in the
cost of rice in thailand to skyrocket. (ethanol uses corn in USA, sugar
beets in Brazil). Not sure about wheat being used for biofuel.

BTW, watch for beer prices to rise.


Electrical energy for cars, homes, and businesses would dramatically
reduce our dependence on oil.

I think americans greatly understimate what their dependance on oil and
wallmart is causing.

This didn't mkake much of the news n the USA, but it was an arab
government fund that bailed out Citigroup over a weekend some months
ago. They now own a big chunk of that bank. It was a Singapore sovereign
group that bailed out another USA bank (don'tremember its name), and the
chinese government fund that invested in another.

The current consumption economy in the USA is causing cash to flow out
of the USA in large quantities going to middle east, china, india etc.
This not only makes the USA poorer internally (since money no longer
flows back to americans), but also results in those sovereign funds
buying USA assets and ending up controling an ever increasing chunk of
the USA economy.

And with the mismanaged USA government debt, it is now financed by
china, middle east, singapore etc. And those countries now have some
pull with the USA government. This is why you won't see the USA
government criticising China *too much* because they cannot afford to
have China dumping all the USA debt its owns onto the markets.

In essence, the USA's dependance on oil and wallmart is causing the USA
to loose control of itself.

In trying to help the texas oil companies, the current government has
made matters much worse. Increased in oil consumption has caused the
increase in fuel prices which have made those foreign funds all the more
richer and the USA poorer.

Those USA airlines without significant fuel hedges are now hurting
badly. UA just announced major losses and major layoffs.

If airlines in the USA are to survive, they need the price of oil to
come down. Southwest has a certain number of barrels hedged at $55.00.
So if United were to shutdown tomorrow, Southwest would have to buy oil
on the open markets if it wants to increase flights to take the slack
from United. But as long as Southwest remains at the same size, it will
benefit from its hedges and be able to provide tickets at prices that
the other carriers cannot match at all.

This is a serious problem.

On Wed, 23 Apr 2008 01:39:15 -0700, "Mr. Travel" wrote:

wrote:

On 22 Apr, 03:48, James Robinson wrote:

Robert Cohen wrote:

Hey, it's only a napkin dooodle idea, though something does need to be
done in the public interest, as more bankruptcies will seemingly hurt
the very competitive industry more.

Why do they need to do this?

In the first place, all airlines have to buy fuel as part of their
operating cost. All they need to do is pass the cost on to their
customers. The fact that the airlines aren't making money is simply that
they all are charging too little for their services, not that fuel cost is
high.

Second, airlines already have the financial mechanism to control the price
of fuel so it is predictable. It's called hedging. Southwest uses it to
great advantage over its competitors. The others just haven't learned.


Or they just 'gambled' the wrong way.


That is an excellent way of putting it.

Which is exactly what hedging is. You look smart if you win and an
idiot if you lose. Good management shouldn't be confused with good or
bad luck.

On Wed, 23 Apr 2008 01:45:51 -0700, "Mr. Travel" wrote:

Robert Cohen wrote:


Wouldn't millions of steam vehicles do in the atmosphere/ionsphere a
la global warming.

What fuel would they use to make the steam?

The problem is that we can save oil in other ways, without killing the
airlines.

True. The Nazis perfected it for coal during WWII. Not exactly new
technology. Or nuclear, which the French have done extremely well.
So well they have too much for their own use and export electricity to
the rest of Europe. Solar, which the sunny states particularly can
do. Wind, which anyone with enough can do. The Gulf Stream which
flows some 8 billion gallons a second to be harnassed. Waves, which
can similarly be harnassed. And on and on. We would rather feed the
money to terrorists and screwballs like Chavez however.


Ethanol is an issue because it competes with the global food supply
Gasoline is a problem because it increases the price of oil for
industries that REALLY need it, like airlines.

That's only corn based ethanol, not sugar based which Brazil produces
and can't export to us because of ridiculous protective tariffs for
our sugar growers. Of all things, we will have an energy crisis to
produce those that produce a fattening non-nutritive crop like sugar.
Ethanol is also an issue for corn because if you look at the entire
production process, it pollutes more than the equivalent oil and
produces some 30% less energy content so the price of the crap has to
be 30% less than gas to be just edquivalent to it. Which can't be
done without taxpayer subsidies, so, of course, that of all the
solutions is the one our stupid politicians have chosen because they
like to starve the poor of the world will making Iowa farmers fat and
happy.


Electrical energy for cars, homes, and businesses would dramatically
reduce our dependence on oil. However, in the US this is problem,
because fossil fuels are being used to get electricity.
What we need are more nuclear power plants.
In fact, burning coal sends more radioactive waste into our atmosphere
than nuclear power plants would.

Never heard this nuclear waste point. Where did you get it from? The
problem with coal is co2 production which can now apparently be
reinserted into the ground.

On Wed, 23 Apr 2008 07:26:27 -0400, John Doe wrote:

Mr. Travel wrote:

Ethanol is an issue because it competes with the global food supply

I am quite suspect of what is going on now. How come the price of food
is shooting up all of a sudden, without warning and "they" blame it on
ethanol ???? I suspect the oil industry, wanbting to protecttheir turf,
may have managed this PR campaign to discredit bio-fuels.

Bull. It's because corn is a basic food staple used in many products
(like fructose for example in tons of food you consume) and because
other crops like soy are dropped to produce the more artificially
profitable corn causing them to go up in price because of shortages.
The perfect solution dreamed up by moron politicians who have caused
all this by subsidizing, mandating and promoting this idiotic so
called solution at taxpayer's expense. Which it's not anyway because
there is no way of producing enough ethanol this way to have much real
dent anyway. Give a politician all the solutions and they will come
up with the stupidest most expensive way to do something.


There is no way that ethanol production would have suddently increased
so dramatically that the stuff used for it would have resulted in the
cost of rice in thailand to skyrocket. (ethanol uses corn in USA, sugar
beets in Brazil). Not sure about wheat being used for biofuel.

There sure is and this is exactly what has happened. The US is hardly
the only one doing this. Europe has done it as well and the markets
for commodities are worldwide. Brazil is the only country I know that
has done it sensibly.


BTW, watch for beer prices to rise.

Sure, for the same reason. Hardly in the same category as, say
Mexico, where tortillas are a basic staple and the price of them there
has gone up some 400% is it?



Electrical energy for cars, homes, and businesses would dramatically
reduce our dependence on oil.

I think americans greatly understimate what their dependance on oil and
wallmart is causing.

That part is true, though ignorance and bitching are hardly a
substitute for an intelligent energy policy is it?


This didn't mkake much of the news n the USA, but it was an arab
government fund that bailed out Citigroup over a weekend some months
ago. They now own a big chunk of that bank. It was a Singapore sovereign
group that bailed out another USA bank (don'tremember its name), and the
chinese government fund that invested in another.

So what? Did you expect horrible management to be rewarded? I didn't
see any American investors jumping at the opportunity to invest in
them.


The current consumption economy in the USA is causing cash to flow out
of the USA in large quantities going to middle east, china, india etc.
This not only makes the USA poorer internally (since money no longer
flows back to americans), but also results in those sovereign funds
buying USA assets and ending up controling an ever increasing chunk of
the USA economy.

So? Get our massively stupid and incompetent politicians to do
something about it then, Start by throwing them all out and starting
again.


And with the mismanaged USA government debt, it is now financed by
china, middle east, singapore etc. And those countries now have some
pull with the USA government. This is why you won't see the USA
government criticising China *too much* because they cannot afford to
have China dumping all the USA debt its owns onto the markets.

The debt isn't mismanaged. It's managed quite well, in fact. The
problem is that it's ever increasing due to the usual stupid
politicians putting us in a senseless, useless war that gobbles up
billions upon billions all while increasing government spending all
over the place and giving tax cuts to those that have no need for
them.


In essence, the USA's dependance on oil and wallmart is causing the USA
to loose control of itself.

You get what you do nothing about,


In trying to help the texas oil companies, the current government has
made matters much worse. Increased in oil consumption has caused the
increase in fuel prices which have made those foreign funds all the more
richer and the USA poorer.

Which is entirely correctible if people would just get off their asses
and do something about it instead of just bitching about it and doing
the same old thing.


Those USA airlines without significant fuel hedges are now hurting
badly. UA just announced major losses and major layoffs.

As if they have any real alternatives.


If airlines in the USA are to survive, they need the price of oil to
come down. Southwest has a certain number of barrels hedged at $55.00.
So if United were to shutdown tomorrow, Southwest would have to buy oil
on the open markets if it wants to increase flights to take the slack
from United. But as long as Southwest remains at the same size, it will
benefit from its hedges and be able to provide tickets at prices that
the other carriers cannot match at all.

This is a serious problem.

No kidding.

On 23 Apr 2008 12:30:17 GMT, James Robinson wrote:

(John Kulp) wrote:

"Mr. Travel" wrote:

wrote:

James Robinson wrote:

Second, airlines already have the financial mechanism to control the
price of fuel so it is predictable. It's called hedging. Southwest
uses it to great advantage over its competitors. The others just
haven't learned.

Or they just 'gambled' the wrong way.

That is an excellent way of putting it.

Which is exactly what hedging is. You look smart if you win and an
idiot if you lose. Good management shouldn't be confused with good or
bad luck.

Hedging, if done properly, is not about luck, or winning or losing. It is
about fixing stable prices for fuel, so company finances are more
predictable.

It's still about luck. If, say Southwest hedges at $55 a barrel, they
look great if it goes to $118. If it falls to $30 then it doesn't
look smart at all.

On Apr 23, 4:45*am, "Mr. Travel" wrote:
Robert Cohen wrote:

Wouldn't millions of steam vehicles do in the atmosphere/ionsphere a
la global warming.

What fuel would they use to make the steam?

The problem is that we can save oil in other ways, without killing the
airlines.

Ethanol is an issue because it competes with the global food supply
Gasoline is a problem because it increases the price of oil for
industries that REALLY need it, like airlines.

Electrical energy for cars, homes, and businesses would dramatically
reduce our dependence on oil. However, in the US this is problem,
because fossil fuels are being used to get electricity.
What we need are more nuclear power plants.
In fact, burning coal sends more radioactive waste into our atmosphere
than nuclear power plants would.

WIKI has a nice write-up.

Is if feasibe today?

My opinion is I dunno, how much electrivity does it take to boil
water?

A vehicle produces/gives off/wastes so much heat that what if some
clever engineers used some of that heat to boil the water?

Two worries:

"steam pollution" and riding in/on/near a tea kettle/pressure cooker
contraption

heat water by electricity

off the wall: heat by nuclear cell

nuke powerred vehicles, them thar elitist green eco totalitarian
freaks etal aren't amused

i presume

DevilsPGD wrote:

In message Benjamin Dover
wrote:


Put them on the "No Fly" list.


They'll just use even more fuel by driving.

Er, these are s'posed to be environmentalists opposed to pollution, so
perhaps they won't drive either. Train, bus, or they won't be able to
afford the gas for driving, and won't go at all. (Cue Andy Rooney's
recent out-of-touch rant on 60 Minutes.)

John Doe wrote:
Mr. Travel wrote:


Second, airlines already have the financial mechanism to control the price
of fuel so it is predictable. It's called hedging. Southwest uses it to
great advantage over its competitors. The others just haven't learned.


Or they just 'gambled' the wrong way.


That is an excellent way of putting it.


Not quite. Hedging requires liquidity/credit in order to ensure that
the airline will have the cash to buy the fuel at the contract price
when the contract expires.

Yes, but what happens if the price drops? Wouldn't WN have lost money on
the deal?

John Doe wrote:

Mr. Travel wrote:

Ethanol is an issue because it competes with the global food supply


I am quite suspect of what is going on now. How come the price of food
is shooting up all of a sudden, without warning and "they" blame it on
ethanol ???? I suspect the oil industry, wanbting to protecttheir turf,
may have managed this PR campaign to discredit bio-fuels.

The price of food will "shoot up" for a variety of reasons

1. Higher prices for shipping, due to higher fuel prices
2. Use of some food products for fuel
3. More of the world can now afford to buy imported food and oil