The Dismal Equation, continued

Airlines lead off their second quarter earnings, or rather losses, this week, with American Airlines first up, or down, as the case may be. American's prospects are, in a word, lousy. Its revenue is likely to have slumped by more than 20% or by some $1.3 billion, a rate that outpaces the serious cutbacks American made in its capacity since last year's second quarter.
There's the rub: no matter how steeply they cut back their capacity, the airlines continue to suffer even steeper revenue declines. May revenues for the major US carriers slumped 18%, and at American, summer bookings are behind last year's. The big papers - The New York Times and The Wall Street Journal - both see a possible liquidity crisis. We did, too.

Another crisis....Let's not waste it

Had enough? It sounds or reads sort of like a broken piece of recording tape: airlines on course for major losses this year as fuel rises, yields plummet and (choose one) a plague or war or recession or some other major act of fate all combine to conspire against them.
This year, losses are growing and are headed toward $9 billion worldwide, the airlines' trade group, IATA, says. Giovanni Bisignani, IATA's chief executive, asks plaintively, "How long must we travel the desert of global recession? There is no modern precedent for today's economic meltdown."
Okay we've all heard it before, but will it lead to anything different this year? Well, take bankruptcies. Will we see any familiar names headed for the courts? Or to the merger tables? Not bloody likely. Some of them tried bankruptcy the last time around, and some of them sort of chatted merger...Well, let no good crisis go unused. They can always use this renewed onset of poverty to fight against pending carbon taxes and environmental imposts.