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Bankruptcy is becoming normal for Americas airlines OVER the past four years Americas airlines have lost 32 billion hit by the effects of terrorist attacks the collapse of the dotcom bubble the war in Iraq the SARS epidemic in Asia and fiercer competition from new low-cost carriers This devastated landscape is now being visited by a sixth horseman of the apocalypse oil prices On September 14th Delta Air Lines and Northwest Airlines Americas third and fourth-largest airlines filed for bankruptcy With United and US Airways already operating under Chapter 11 bankruptcy regulations at least half of Americas airline industry has now been declared bankrupt These firms will keep flying on empty thanks to court protection from their creditors But a once-proud industry is officially on its knees The impact of higher oil prices on the industry was outlined this week by Giovanni Bisignani the director-general of the International Air Transport Association He forecast that this year American carriers losses would be around 8 billion some 2 billion more than he had forecast as recently as May when the price of oil at 47 a barrel was already twice that of four years ago Today the oil price stands at 64 Facing fierce competition from relative newcomers like Southwest and JetBlue which are still profitable the older legacy airlines with their much bigger fixed costs are unable simply to pass the higher oil prices onto their customers Yet earlier this summer there were some signs of light in the skies Airline passenger numbers were up Planes were on average 79 full which was a small improvement Revenues per seat yields were still falling 18 down on the same period in 2004 but that is part of a long-term trend Thanks to fierce cost-cutting and with the co-operation of worried unions there were flickers of hope on the horizon In the April-June quarter American Airlines the biggest made 58m its first net profit excluding special factors in
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