The Tale Of Two Airline Sectors
The financial press has been full of doom and gloom predictions from British Airways with oil pushing higher, air travel taxes starting to hit home and customer numbers starting to fall in line with reduced economic activity. So you might be mistaken for thinking that the whole airline sector was is in turmoil and on the verge of collapse, well think again!
We have just seen confirmation of two of the largest airline purchase deals in years with the Abu Dhabi airline agreeing the purchase of 205 planes at a cost of $43 billion and Fly Dubai announcing a multi-billion dollar deal to purchase 50 planes. Of course the only different between the likes of British Airways and the Middle East airliners is oil, and the fact that one is making billions selling it and the other is losing millions buying it (in the shape of airline fuel).
There is a growing feeling that the longer the oil price stays around the current levels (or moves higher), the richer these oil region national airlines will become. We may well see the balance of power switch to the Middle East with a number of large European and US airlines under serious financial pressure and open to takeover offers or mergers to save their skins.
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