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When we think of the US economy…we shudder. That’s how it is in every industry, including U.S. airlines that saw their shares fall Tuesday morning.

September 14, 2011 – When we think of the US economy…we shudder. That’s how it is in every industry, including U.S. airlines that saw their shares fall Tuesday morning.

Unfortunately for carriers, adding to the fear of chaotic world economy is that it would affect them concurrently with a critical time of year.

More than actual travel volume worries are the uneasy projections that are quite sluggish:

  • The average second quarter financial outcomes have weakened by 60 percent (International Air Transport Association)

Furthermore, fuel costs are up 50 percent from last year.

Distributions of new aircrafts have been marked up which, in turn, obligates airlines to have more than enough passengers. This is simultaneous with the financial despair that is occurring.

It is during travel season, which is the third quarter, when airlines produce the greatest number of profits; nevertheless, there is the worsening market situation to ponder.

Breakdown of quarters:

  • First quarter: deficit
  • Second quarter: profits (80 percent of profits together with third quarter numbers)
  • Third quarter: profits
  • Fourth quarter: feeble

The IATA determined that airlines grossed $1.8 billion in the second quarter, however, lower by 60 percent from the previous year.

Key U.S. airline stocks dropped more than 2 percent in early trading.

  • The world’s largest airline company, United Continental Holdings Inc., slid 70 cents, or 3.9 percent, to $17.37.
  • Stocks of Delta Air Lines Inc. fell 19 cents, or 2.6 percent, to $7.08.
  • The Dow Jones Industrials Average lost nearly 300 points in early trading.

The Dow Jones industrial average decreased by more than 250 points. The trouble came after abrupt declines in European indexes last Monday regarding anxieties that Europe’s debt problems could slow growth throughout the world.

Adding to the uncertainties, a statement last Tuesday on the U.S. service sector will most probably demonstrate the fourth straight month of dwindling growth.

It shadows a jobs report Friday that no jobs were supplemented to the economy in August.

Since September 2010 there hasn’t been such a poor reading on the jobs market.

Shannon King

Senior Staff Writer – GoldSilver.org

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