Tag Archives: Transportation

Analysis: Why Airlines Aren’t More Profitable

Passenger airlines are a crucial industry in the global economy, but the sector is also extremely volatile. Running a passenger airline is an asset-intensive industry with narrow profit margins.

Despite the risks, the industry has experienced some periods of consistent growth, which can lull investors into a false sense of security. Watch the video above to learn whether investors should steer clear of the sector and why passenger airlines struggle to stay profitable.

Video timeline: 0:00 – Introduction 1:35 – Industry shocks 6:16 – Business models 8:28 – Deregulation and consolidation 12:55 – Industry outlook

Billionaire investor Warren Buffett once called himself an “air-o-holic” because of how tempted he is to invest in commercial airlines. But he learned the hard way, twice, that the industry can be a risky bet. Airline stocks have been on a wild ride since the beginning of the pandemic, which shows just how volatile the sector can be. “It seems that airlines once or twice a decade are hit with these really hard-to-process exogenous shocks, whether it’s something like 9/11 or the Great Recession,” said Adam Gordon, managing director and partner at Boston Consulting Group’s Airline Practice. The passenger airline industry is already asset-intensive, with narrow profit margins. Despite the risks, the industry has experienced some periods of consistent growth. Airlines saw big growth in profits for about a decade prior to Covid, which analysts attribute to the airlines restructuring post-9/11. These periods can lull investors into a false sense of security. In 2017, the CEO of American Airlines said he was confident the business was never going to lose money again. Airline stocks may be appealing to investors because the industry is crucial to the global economy. “If you just step back and you think about what service airlines are offering, they’re putting you in a metal tube, taking you up to 40,000 feet, and transporting you in relative or absolute comfort at hundreds of miles an hour to get from point A to point B. And if you think about the substitutes for that service, like, there really aren’t any,” said Gordon. “So it’s kind of surprising to me that an industry that delivers that kind of a service and does it with an absolutely impeccable operational and safety record is able to come under such pressure,” he added.

Analysis: Why The Age Of American Cars Is Rising

In 2021, the average age of vehicles on the road reached a record 12.1 years. Every driver that chooses to hold on to a car for another year is postponing a trip to the dealership, and some industry analysts wonder if rising vehicle ages and prices indicate trouble for new car sales in the future. Automakers are stuffing cars with new technology and improvements but will that be enough to keep buyers wanting the latest and greatest?

Analysis: How Amazon Is Taking On Fedex & UPS

Amazon is on a spending spree to grow its fleet of planes, vans, semitrucks and drivers in its latest move to compete with FedEx and UPS. Now, it’s using the added capacity to move cargo for outside customers, betting big on the business of third-party shipping while also shipping 72% of its own packages. CNBC talks to former Amazon executives and current customers using the shipping services to find out all about the behemoth’s next big move.

Aviation: Boeing & Airbus Counter China’s Comac

Boeing and Airbus dominate global aviation, but China’s Comac wants to challenge the duopoly with new planes. WSJ’s Jon Sindreu explains how supply chains, technology and geopolitics could help the Western aircraft makers to protect key markets. Photo Composite: George Downs

Covid-19: The Economist ‘Global Normalcy Index’

Across much of the world, covid-19 restrictions are starting to ease. The Economist has crunched the data to calculate how close countries are to pre-pandemic levels of normality—but will life ever be the same again? Read more here: https://econ.st/3AG9siz

Travel: The Rental Car Shortage Explained (WSJ)

This summer it’s harder than ever to rent a car in the U.S., especially at popular vacation destinations. To learn what’s behind the spike in rental car prices, WSJ speaks with an industry analyst and WSJ’s Nora Naughton. Photo: Luke Sharrett/Bloomberg

Views: Flying ‘AirCar’ Is Tested In Slovakia (Video)

A flying car has successfully completed its first intercity flight between two airports in Slovakia. The prototype, called AirCar, took off from Nitra and landed in Bratislava 35 minutes later. Using wings that fold away in less than three minutes and a propeller at its rear, the dual-transportation vehicle has now completed more than 40 hours of test flight.