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Jet Feul

Table of Contents

Table of Content Pg.2
Abstract Pg.3
Body Pg.4-14
Appendix Pg.15
Bibliography Pg.16-17

Abstract
The airline industry is dealing with many of the same economic problems today as it did years ago. Rising fuel prices, high union contracts, and competition among the industry are just some of the problems I will cover. Then I will apply some course concepts to these ongoing problems the airline industry is facing. Finally, I will give some recommendations on what economic decisions should be made to save them from filing for bankruptcy.

Airlines
Background
Many of the major airline companies among the United States are facing overwhelming debts they will never be able to pay back. Of the ten largest airline carriers in the United States, only one of the companies recorded a profit for 2004. The collapse of many airline companies could happen by the end of this year if a solution is not reached on how to overcome some of their financial problems “Nearly 20 percent of operating airlines are operating under chapter 11 bankruptcy today, and those companies are still finding ways to borrow more money from their lenders to stay in business. Many airline analysts believe that 70 percent of the industry could be operating under bankruptcy court protection by the end of the year” (Kiger 84). If this were to happen it could turn into an economic disaster, not only for the firms involved, but the consumer and employees would also be affected.
Since the September 11th terrorist attacks, there has been a drastic drop in the demand for air travel. The most common problem the airline industry is facing is the price of jet fuel. This has forced many firms to reallocate their resources to help compensate for the rise in fuel prices. “Several of these carriers including Delta Airlines, who recorded an estimated 5.2 billion dollar loss last year, are seeking to restructure their operations in many ways in order to stay...