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#21
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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. |
#22
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How To Prevent Destruction of Airline Industry: Non-Profit VerticalOil Company
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. |
#23
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How To Prevent Destruction of Airline Industry: Non-Profit Vertical Oil Company
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. |
#24
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How To Prevent Destruction of Airline Industry: Non-Profit Vertical Oil Company
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. |
#25
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How To Prevent Destruction of Airline Industry: Non-Profit Vertical Oil Company
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. |
#26
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How To Prevent Destruction of Airline Industry: Non-Profit Vertical Oil Company
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. |
#27
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How To Prevent Destruction of Airline Industry: Non-ProfitVertical Oil Company
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 |
#28
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How To Prevent Destruction of Airline Industry: Non-Profit VerticalOil Company
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.) |
#29
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How To Prevent Destruction of Airline Industry: Non-Profit VerticalOil Company
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? |
#30
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How To Prevent Destruction of Airline Industry: Non-Profit VerticalOil Company
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 |
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