- Capital intensiveness
- High fixed costs resulting in excessive operating leverage
- Unpredictable fuel expenses that airlines have little control over
- Fuel expenses typically make up a substantial portion (~20-30%) of an airline's cost structure with potential spikes beyond that level
- Minimal to no pricing power
- Excessive debt (financial leverage)
From an article in The Onion:
In its ongoing effort to cut transportation costs and boost profits, United Airlines announced Tuesday that it was exploring the feasibility of herding them into planes and stacking them like cordwood from floor to ceiling.
"After much trial and error, we've found the most efficient way to stack them is to start with a base of large ones, then put down a layer of medium ones, then fill up all the holes with the smaller ones," operations manager Gary Brown said. "The really tiny ones are great for cramming up in the corners."
That's, at the very least, a novel approach to solving a difficult problem.
This site does not provide investing recommendations as that comes down to individual circumstances. Instead, it is for generalized informational, educational, and entertainment purposes. Visitors should always do their own research and consult, as needed, with a financial adviser that's familiar with the individual circumstances before making any investment decisions. Bottom line: The opinions found here should never be considered specific individualized investment advice and never a recommendation to buy or sell anything.