[FatherOfTwo]

Delta sees higher risk of bankruptcy filing

http://www.msnbc.msn.com/id/7803628/

[bruin]

A good canary I believe is the SUV industry. To date, many of the larger SUVs in are decline.

The impact on the big 3 is large since much of their revenue is dependent on them.

Each SUV taken off the market is another dead canary. After enough these canaries go, we can watch the big 3 falling down next.

[bruin]

As far as the airlines being a canary, I agree to a point. The silly thing about the airlines is that they are playing a game of chicken with their fares. Obviously, they can raise ticket prices and cut routes till things balance out but they can't because the other guy keeps him in check.

In the end, a couple of the majors will fold, capacity will drop, and balance will be achieved. I don't expect LAX to be shut down anytime soon.

[eastbay]

The current UAL story will bear close watching. After dumping the pensions, which will happen regardless of how much protesting or striking the unions do, there will be no other body parts remaining to eat. The next item on the dinner table will be the planes themselves, in other words, liquidation. Apparently many of their planes are on the verge of being repossessed.

UAL was America's largest airline five years ago, and what we are witnessing now is UAL's final chapter. That will be one big dead canary.

http://biz.yahoo.com/ap/050510/united_a ... html?.v=11

EastBay

[Tanada]

$this->bbcode_second_pass_quote('eastbay', 'T')he current UAL story will bear close watching. After dumping the pensions, which will happen regardless of how much protesting or striking the unions do, there will be no other body parts remaining to eat. The next item on the dinner table will be the planes themselves, in other words, liquidation. Apparently many of their planes are on the verge of being repossessed.

UAL was America's largest airline five years ago, and what we are witnessing now is UAL's final chapter. That will be one big dead canary.

http://biz.yahoo.com/ap/050510/united_a ... html?.v=11

EastBay

[seahorse]

Where are all those who said GM sinking wouldn't cause a big economic problem for us all? Do you still stand by the prediction? Just mere rumors that hedge funds may have been kicked in the nuts by the GM bond downgrade sent the stock market tumbling today. So, is everyone still happy and thinking GM sinking is no big deal?

GM, Ford, UAL, those are all three pretty big canaries, I don't think they're dead yet, but by the way they've fallen off of their perch and are flapping around in circles on the ground, going no where, I think that's a sign to bail out of this mine shaft. Anyone got lungs big enough to give those canaries mouth to mouth??

[Tanada]

$this->bbcode_second_pass_quote('seahorse', 'W')here are all those who said GM sinking wouldn't cause a big economic problem for us all? Do you still stand by the prediction? Just mere rumors that hedge funds may have been kicked in the nuts by the GM bond downgrade sent the stock market tumbling today. So, is everyone still happy and thinking GM sinking is no big deal?

GM, Ford, UAL, those are all three pretty big canaries, I don't think they're dead yet, but by the way they've fallen off of their perch and are flapping around in circles on the ground, going no where, I think that's a sign to bail out of this mine shaft. Anyone got lungs big enough to give those canaries mouth to mouth??

[MonteQuest]

U.S. Airlines May Lose $5 Billion on Fuel Costs

$this->bbcode_second_pass_quote('', 'U').S. airlines will probably lose at least $5 billion this year along with more industry jobs because of high fuel costs, the head of the airlines' main trade group warned Congress on Thursday.

Over the last four years, airlines have lost $32 billion during the industry's worst financial downturn. The airlines blame their woes on crude oil prices that have more than doubled, increased security costs and low fares brought on by intense competition.

[MicroHydro]

$this->bbcode_second_pass_quote('MonteQuest', '[')b]U.S. Airlines May Lose $5 Billion on Fuel Costs

[OilyMon]

I don't think the airlines will be the canary, just one alone the way. The arilines industry, because of an extremely high overhead, is one of the many industries in the States that depends on volume for profit. Volume and volume alone. Just like MacDonalds, Walmart and GM, if the sales volumes evaporates so do the profits.

The airlines have a few strikes against them:

1) High up frount capitol - a 747 doesn't come cheap.
2) High operating costs - pilots aren't cheap and neither is fuel/maintenance
3) Largely reliant on volume of sales, especially when factoring in price competition between discount carriers.

A lot of business in fact most business operate with a similar model. Like I said above there are a wide variety of business that rely on volume to turn a profit. The airlines however are more sensitive to fluctuations in demand and operating costs then a McDonalds, or a GM factory are.

If the above characteristics were quantified and applied to a variety of different businesses, I think it would be obvious that the airliners had a much smaller margin than many of the other industries in the US.

This is why they are a very good early warning indicator.

If the airline canary is in the heart of the mine, what canary is in the upper shafts? Who's next to crumble? Big auto would be my guess. Car manufacturers have similar cimcumstances to the airliners. High capitol costs, high operating costs, and a reliance on volume sales. Have you seen the invoice prices for a new model? Some car companies profit only 10% per car they make! There isn't a lot of room for movement.

[RdSnt]

It will likely be hard to track but I regard likely canaries are the financiers in the Carribean that are propping up the US stock markets and US economy.
There is a limit to how much money even they can push into the market.
The Carribean banks are the leading financiers in the market at the moment.
The tinfoil hat side of me thinks there must be a lot of drug money being laundered. You notice how little talk there is about the war on drugs by the administration these days. Even though Central America is becoming a real political problem and Afghanistan is pumping out barrels of opium.

The US economy is becoming so dependent on the Carribean for support that the secretive nature of the undertaking is going to be impossible to maintain.

It's going to be very interesting to see the reaction of the American public when they find out that the bin Laden family is buying up their country.

[dougr]

I haven't read the entire board here so I don't know if it's been mentioned yet but
Iraq is one canary that is well and truly dead...along with 10s of thousands of Iraqis and over 1700 Americans, Brits, Italians, Spaniards etc.
In more general terms...peace was the first obvious canary in the coalmine to expire.

[eastbay]

NEW YORK (Reuters) - Northwest Airlines Corp. (NWAC.O: Quote, Profile, Research) has proposed firing 2,031, or nearly half of its mechanics, in a bid to save $176 million a year, their union said in a document posted in its Web site on Monday.
The Eagan, Minnesota-based airline also is asking the 2,381 mechanics who would remain to take a cut in their base pay of about 26 percent, the union said.

The fourth-largest U.S. airline is trying to renegotiate contracts with all its unions to trim costs to compensate for higher fuel prices and tough competition from low-cost carriers that have pushed it deeply into the red.

The airlines will be among the first dead canaries. They will continue to lop off parts of themselves until all parts are gone.

EastBay

[Grimnir]

What about grocery stores? Their profit margins are typically under 2%, and transportation costs have got to be chipping away at that. Prices on some items have certainly been rising, but I haven't noticed across-the-board inflation for food just yet.

[Battle_Scarred_Galactico]

"firing 2,031 and asking the 2,381 mechanics who would remain to take a cut in their base pay of about 26 percent"


Wow, things aren't looking too good then. Don't worry though boys, once we get those soybean powered jet engines you'll be back to work in no time.

[jimmydean]

As per MQ's Canary in the Mineshaft thread. Is it beginning?

[mpg]

No - Maybe it ought to but the lawyers have it tied up for awhile. Chapter 11 is used as sword to avoid contracts, beat up on labor and stick the government with the pensions. Look for actual changes in the way airlines operate: Higher prices, mergers, dropping routes, decreased maintenance , lack of investment in new planes. I wonder if price competition could drag down the entire industry...

[RdSnt]

$this->bbcode_second_pass_quote('mpg', 'N')o - Maybe it ought to but the lawyers have it tied up for awhile. Chapter 11 is used as sword to avoid contracts, beat up on labor and stick the government with the pensions. Look for actual changes in the way airlines operate: Higher prices, mergers, dropping routes, decreased maintenance , lack of investment in new planes. I wonder if price competition could drag down the entire industry...

[linlithgowoil]

its just a transition phase really. the problem is that there are probably too many airline operators worlwide driving prices too low. there needs to be a big reduction in airline operators to enable them to double their prices or more. this will happen soon enough i suppose.

[BabyPeanut]

$this->bbcode_second_pass_quote('', '[')url=http://news.airwise.com/story/view/1126345140.html]"There simply is no rational business plan we can continue to operate under with fuel at the price it is today," Jim May, the association's chief executive, said in an interview with CNBC.[/url]