Surging fuel prices mean the airline industry may be heading for its worst year ever. And that's saying something for an industry that's...
Surging fuel prices mean the airline industry may be heading for its worst year ever. And that’s saying something for an industry that’s posted a cumulative $9.06 billion net loss since 1938.
John Heimlich, chief economist of the Air Transport Association of America, estimates the industry could lose $7 billion to $13 billion this year. The industry’s biggest annual loss to date was its $11 billion deficit in 2002, when it suffered the effects of a recession and the Sept. 11 terrorist attacks.
Much of the problem for the industry is that jet-fuel prices are up 216.6 percent since 2000, but the average fare to fly 1,000 miles is down 0.5 percent over the same span, according to the group.
The industry has been adding new fees and surcharges to boost revenue, rankling passengers. Several airlines, including American and United, will charge $15 for the first checked bag. US Airways will charge $2 for sodas and bottled water.
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Companies are putting the brakes on stock buybacks.
Repurchases by companies in the S&P 500 index fell during the first quarter from their year-ago level for the first time since 2003. Businesses bought back $113.9 billion in stock, down 3.2 percent, according to Standard & Poor’s.
Part of the drop was due to hard-hit financials. They made up just 12 percent of the first quarter’s total, down from 29 percent in the first quarter last year.
The credit crunch has banks selling new stock to raise cash and shore up their balance sheets.
That’s the spirit
Americans continue to imbibe despite the weak economy. U.S. spirits sales grew 5.7 percent in May, according to AC Nielsen. Lehman Brothers analyst Ian Shackleton says liquor stocks are defensive plays in a tough market. He likes Diageo (DEO) among others. The company’s Baileys liqueur grew sales by 12.5 percent in May, says Citi Investment Research analyst Philip Morrisey.
The Associated Press