Airline Economics

What is it with airlines? Why are they always in financial trouble?

For as long as I can remember, the airlines have reminded me of everybody’s poor uncle, always in debt and down on his luck. Whether it’s price wars, mechanic strikes, or terrorism, the industry seems to live under one of those dark clouds that storms and rains just on the main character.

Currently the pressures are immense: soaring jet-fuel prices, serious maintenance issues, unprecedented flight delays, and cutthroat competition are combining with an economic slowdown to make many consumers question whether it’s worth flying at all this summer.

Airlines strike me as one of those businesses that are great fun to be in, but are often lousy investments. The excitement and glamour of flying make it so attractive that loads of very smart people get involved in the business. As a result, competitive pressures push margins to the minimum, and there’s just no wiggle room.

Don’t get me wrong: I love flying. But right now the industry seems to be hitting a perfect storm.


Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T18:58:53+00:00 May 27th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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