The tipping point

Judging by the spate of bad news of late, one could deduce that the much talked about industry downturn is now sinking its teeth in – and it would appear that its going to be more thanjust a flesh wound. Bankruptcies and red-ink seem to be flying right, left and centre. Aloha Airlines and Oasis […]


Judging by the spate of bad news of late, one could deduce that the much talked about industry downturn is now sinking its teeth in – and it would appear that its going to be more thanjust a flesh wound.

Bankruptcies and red-ink seem to be flying right, left and centre. Aloha Airlines and Oasis Airlines are the two most recent to go belly up, and many more are teetering on the brink. Alitalia, still caught up in a political tailspin has been described, most unkindly, by one industry veteran as "a flying corpse".

Even industry leaders like Singapore Airlines and Japan Airlines (this month’s cover story, p. 28), while still in the pink of health, are battening down the proverbial hatches in anticipation of worsening weather ahead.

In China, scene of enormous cargo growth, but also enormous competition for that cargo, it’s been a rough ride for some, like Shanghai Airlines which just turned in a US$62 million loss for 2007. In the US, things are dire. Delta Air Lines reported a second-quarter loss of US$18 million, though it was smaller than the one a year ago. Southwest Airlines said its earnings fell 47 per cent. And Continental Airlines projected a loss of $41.9 million. Northwest meanwhile – which has pulled its freighters off the transpacific (this month’s profile, page 34) – similarly reported a first quarter net loss of $191 million.