Inefficient Planes and Rising Oil Prices Sunk American Airlines
As you may have heard, American Airlines declared bankruptcy earlier this week. There are a number of reasons the country's erstwhile largest airliner is no longer financially viable, the most discussed of which are purportedly too-high labor costs. But another top expense that was apparently draining American Airlines' coffers was its fleet of old, incredibly inefficient planes.
Here's the NY Times:
American owns and operates a regional carrier, American Eagle, that flies 50-seat jets that are among the least efficient to operate ... And more than a third of [American Airlines'] 600 planes are McDonnell Douglas MD-80s, an aging design that burns more fuel than newer models.Rising oil prices hit the airline exceptionally hard. It had an aging, inefficient fleet to begin with, so skyrocketing oil prices cut even deeper into its bottom line than it did with AA's competitors.
“If oil was still at $50 a barrel, we wouldn’t be having this conversation,” said Mike Boyd, an airline consultant. “Their bet was to hold on to their older MD-80s until Boeing came up with a new airplane. As we know, that didn’t happen.”
No matter how many times we highlight the win-win benefits of embracing efficiency measures, or explain how it truly is a low-hanging fruit ripe for the taking both by industry and the government, the message doesn't always seem to get through. And oil prices are going nowhere but up. Take note, oil-reliant transportation companies: Investing in fuel efficiency is the best idea you'll have this century.