Contact:
Robert
Herbst                                          
         AirlineFinancials.com
Phone:
(314) 518-6318
                                           FOR
instant RELEASE
Email: bobh@airlinefinancials.com                       
              November
18, 2008
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Airline Industry 2009 Recovery - perhaps -

By Robert Herbst

Only weeks ago due to the unprecedented
rise in fuel costs, analysts were  predicting
doom for the airline industry.

nowadays, crude oil is by 60% less than it was just by three months ago and  the price of

jet fuel is about what it was in
early 2007. In anticipation of lower demand, every major airline reduced
capacity starting with the current Q4 2008.  (See note at end regarding jet fuel pricing).

Those same analysts who were  predicting airline failures are now  projecting $billions in profits for 2009.

As they say- "things change"!

whether jet fuel remains at or below today’s price, Q4 bottom line expense will be further reduced by 4-5% from current  projections.

Profits more or less require the right balance amidst capacity, pricing and costs.

After reviewing recent traffic reports and capacity
guidance, it is easy to invent an

argument there is still 10-15% excess capacity
which will inspire fare sales  and
lower overall yields into 2009.

Based on estimated earnings for year 2008, the
largest 8 airlines are projected to lose by $5.3 billion (does not include
a few $billion more in non-cash write-downs).

In spite of creative ala carte
fees for everything from fuel surcharges to a blanket,  2008 revenue was not adequate to cover the real
costs of airline operations.  Southwest’s
fuel hedges were the only reason they had a profit.

Assuming October traffic demand carries forward
through that year and start of 2009,

the 4^th quarter revenue/cost
projections do  not indicate a profit
until traffic increases

or/and fuel cost projections are reduced.

As we move through Q1 2009, there should  be a more predictable view of the impact  depressed Global economics will have  on traffic demand.

Note: Jet fuel has a price premium above crude oil known as the crack spread.
Recent

jet fuel price has been 8-10% higher than the final
day crude oil was $55-60 per barrel.

The link below will supply access to an interactive
worksheet that allows the user to manufacture multiple changes to each airlines financial
and operational metrics.

Numerous projections, including net earnings are automatically
calculated with each change.

Link to revenue cost interactive
charts  from AirlineFinancials.com.

# # # #

______________________________________________________________

Robert Herbst has been a commercial pilot since
1969. His aviation experience and

financial background provides a strange
analytical perspective into the airline industry.

His website: Airlinefinancials.com provides airline
industry analysis and commentary

for major US carriers.