Growing evidence that the downturn is upon us....
PPRuNe Handmaiden
I remember the recession affects in the early 90's. Next to no jobs for years. Folks had to go to the Middle East or Asia to get a look-in. Only those with extensive experience got a start.
I remember the crash in 2001-2002 as well. Nothing was available. Again, only those with thousands of hours had a chance. Most had to either go to NetJets Europe or head to the ME or Asia.
Contractors will be let go. Thin routes will be let go. Last in first out. Keep a very close weather eye on your own situation. Minimise your own exposure to debt based on future earnings.
I remember the crash in 2001-2002 as well. Nothing was available. Again, only those with thousands of hours had a chance. Most had to either go to NetJets Europe or head to the ME or Asia.
Contractors will be let go. Thin routes will be let go. Last in first out. Keep a very close weather eye on your own situation. Minimise your own exposure to debt based on future earnings.
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FOR THE ATTENTION OF WWW 
:
1. First things first doing type rating with a company in next few weeks so nearly not a wannabe, but enough about me,quite frankly who cares.
2.Your smart ass comments are not well placed,your obviously a negative person riven by pessimistic views i couldnt be more different in mindset(so we will obviously differ in opinion).I feel your points are negative in the extreme.
3.Yeah sure you may have more airline knowledge im certainly not disputing that,however airlines are businesses full f$$$in stop,and like bloody humans its survival of the fittest.
You said:There will be no jobs for no-time wannabes the day after the first UK airline goes bust.
Well go ahead and give me 3 reasons how a small regional( in lets say, oh i dunno, isle of man)going bust will have such a drastic effect on big low cost or strong 'exclusive' airlines????thats right b$lix
researching low cost carriers recent quarterly and annual results its obvious that there is a slowdown.we all f$$$in know that . However and this is the key,most of the low cost airlines are reporting a drop in PROFITS so i presume your overlooking the fact that these airlines are still making handsome PROFITS albeit less than previously.You go ahead and give me 3 BIG low cost airlines in europe that are reporting significant full year losses as opposed to falls in PROFITS.
Lets look at balance sheets and a trip down memory lane perhaps.After 9/11 what happened.1.people traded down to low cost so good buy expensive airlines(cue Swiss) 2. LATE 2001 a certain low cost carrier ordered 155 planes as a result of strong cash reserves = more pilots over next few years needed. this move was followed by others=more pilots over the next few years
You Said:Be in no doubt that a recession will have the same effect as it did the last time in 1990 - 1993. For reference look up DAN AIR.
My response:
The reasons why Dan Air failed:
1.Among the main reasons for the airline's sudden "financial tailspin" and its ultimate demise were a lack of "vertical integration" with a major UK tour operator
2.Another important reason that was said to have contributed to Dan-Air's failure was the fact that its fleet contained too many different, incompatible aircraft types, and that some of these planes were considerably older and far less efficient than the latest state-of-the-art aircraft operated by some of its competitors
3.
Furthermore, some industry analysts viewed Dan-Air's decision to embark on a major expansion into scheduled services from its Gatwick base at a time when the UK economy was still mired in the early 1990s recession, the airline's financial position worse rather than improve it.
Dan Airs failure was more to do with crap management ,downturn just amplified the problems.Do you see the big low cost airline management of today making such vile incompetent errors.
Cheers
:1. First things first doing type rating with a company in next few weeks so nearly not a wannabe, but enough about me,quite frankly who cares.
2.Your smart ass comments are not well placed,your obviously a negative person riven by pessimistic views i couldnt be more different in mindset(so we will obviously differ in opinion).I feel your points are negative in the extreme.
3.Yeah sure you may have more airline knowledge im certainly not disputing that,however airlines are businesses full f$$$in stop,and like bloody humans its survival of the fittest.
You said:There will be no jobs for no-time wannabes the day after the first UK airline goes bust.
Well go ahead and give me 3 reasons how a small regional( in lets say, oh i dunno, isle of man)going bust will have such a drastic effect on big low cost or strong 'exclusive' airlines????thats right b$lix
researching low cost carriers recent quarterly and annual results its obvious that there is a slowdown.we all f$$$in know that . However and this is the key,most of the low cost airlines are reporting a drop in PROFITS so i presume your overlooking the fact that these airlines are still making handsome PROFITS albeit less than previously.You go ahead and give me 3 BIG low cost airlines in europe that are reporting significant full year losses as opposed to falls in PROFITS.
Lets look at balance sheets and a trip down memory lane perhaps.After 9/11 what happened.1.people traded down to low cost so good buy expensive airlines(cue Swiss) 2. LATE 2001 a certain low cost carrier ordered 155 planes as a result of strong cash reserves = more pilots over next few years needed. this move was followed by others=more pilots over the next few years
You Said:Be in no doubt that a recession will have the same effect as it did the last time in 1990 - 1993. For reference look up DAN AIR.
My response:
The reasons why Dan Air failed:
1.Among the main reasons for the airline's sudden "financial tailspin" and its ultimate demise were a lack of "vertical integration" with a major UK tour operator
2.Another important reason that was said to have contributed to Dan-Air's failure was the fact that its fleet contained too many different, incompatible aircraft types, and that some of these planes were considerably older and far less efficient than the latest state-of-the-art aircraft operated by some of its competitors
3.
Furthermore, some industry analysts viewed Dan-Air's decision to embark on a major expansion into scheduled services from its Gatwick base at a time when the UK economy was still mired in the early 1990s recession, the airline's financial position worse rather than improve it.
Dan Airs failure was more to do with crap management ,downturn just amplified the problems.Do you see the big low cost airline management of today making such vile incompetent errors.
Cheers
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WWW, you may well be right about everything but, personally, I'm getting a little irritated at the manner in which you deliver the message of doom. It is almost as if you are taking some sort of sick pleasure. Give it a break.
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So it IS different this time.
A downturn where more pilots are needed!
I'm off to get a new Porsche despite the boss saying profits might be down by £900m 'going forward'. What does he know, ppfff.
A downturn where more pilots are needed!
I'm off to get a new Porsche despite the boss saying profits might be down by £900m 'going forward'. What does he know, ppfff.
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Leeds 65,
Good luck in your Type Rating.
However I think you're wrong in your analysis of the current situation. Specifically I dispute your analysis of how airlines are reporting a profits and will simply report lower profits in the future as the higher oil price takes hold.
BA reported a full year profit of £883m for their previous financial year. This year ran 1 April 2007 to 31 March 2008. Reading a few financial reports shows that these results did not reflect the full price of the recent oil price hike as BA had hedged "well over half of that years annual fuel requirements at prices ranging from $82 to $90 a barrel."
Currently oil is trading at approx $126 a barrel. That is 40% higher than the BA upper hedged position of 07/08 of $90 a barrel.
The BA £883m profit is after a £2.1bn fuel bill. If BA have to spend 40% more on fuel in 08/09 this fuel bill would become £2.94bn - an increase of £840m. Which happens to be approximately equal to last years profit.
Also let's not forget that oil is currently trending persistently upwards and other 'experts' have predicted $200 a barrel. Ever increasing fuel prices will turn last years black ink after net profit into FY08/09's red ink for net losses.
Your analysis is looking solely at the past. FR/EZY/BA management along with all other airline management ought to be forward looking. They are worried about where the oil price is going. Ryanair is unhedged at the moment if i'm not mistaken and i don't know about the others. So while you may hope the airlines will simply report reduced profits i think that if oil continues at this high price then they will be reporting losses. We are seeing quarterly reports, and annual reports which are historic looking, wheras management are looking at monthly management accounts, advance bookings, loads and yields, and budgets which will reflect a range of scenarios.
I would guess that chiefly they are worried about what will happen the bottom line if oil is $120 a barrel, or $110 a barrel or $150 a barrel. Also they will be looking at what will happen if the load factor drops or the yield drops as a result of slowing consumer demand.
If the economy continues to slow then pax will surely cut some non essential travel, companies will reduce travel budgets. This will affect all airlines in some shape or form.
EZY and FR will probably pick up some price sensitive travellers who choose a budget carrier for a weekend break and save a few bob on a legacy carrier's fare, but you ignore the potential loss of revenue to the budget carriers some of whose pax simply choose not to fly for the same reason as the BA traveller switched to a low fare carrier. PResumably under pressure with mortgage repayments, petrol, home heating oil, food price increases and whose job security may be under threat.
I believe FR are grounding more aircraft through the winter than was the case last year, the BA announcement said that they were reviewing costs, capacity etc.
The strongest airlines will survive. FR has a cash mountain to ride it out. I presume BA/EZY do also. But you can be certain that Messrs O'Leary, Walsh and Harrison? will be taking steps to ensure that they minimise losses.
WWW is making the point that in the current economic climate that demand for new low houred pilots is certain to decline/cease in the short term. I believe he is right.
From reading this thread and the reactions to many of WWW's comments, many people seem to think that WWW is so pessimistic that he can't sleep at night for worry that the sun might not rise tomorrow. But his words of caution and advice to wannabe's seems to boil down to:
1. Demand for low houred pilots will decline/cease in the near term as a result of the wider fall out from a slowing economy and a rising oil price.
2. Avoid taking on £60k of debt in the anticipation that in 14 months time, with the only qualification to your name being an fATPL you will be able to walk into a RHS and repay £1k a month comfortably.
3. By all means continue training but do it at a pace that your current income enables you to afford whilst not putting the house, car, or family relationships in jeopardy.
4. The FTO's have a vested interest in selling you flight training so whilst they point to an imminent pilot shortage and encourage you to enrol on their course that perhaps the true prospects aren't quite as rosy as they will lead you to believe.
To me they seem sensible words of advice, from someone who is a skipper with a loco, has been an instructor at a big integrated FTO, has at least 10 years experience of the industry at the coal face, who is clearly well versed in economics, and whose wife works for a big bank which I think is a PLC.
This is hardly the ramblings of a drunk at the bar of your local.
Listen to all the advice then make up your own mind. Alternatively clamp the Peltors tightly over your head, ignore that Met and Notams and hope that in 14 months time you walk into the RHS of that A380. Carlsberg don't do pilot recruitment but if they did...
Good luck in your Type Rating.
However I think you're wrong in your analysis of the current situation. Specifically I dispute your analysis of how airlines are reporting a profits and will simply report lower profits in the future as the higher oil price takes hold.
BA reported a full year profit of £883m for their previous financial year. This year ran 1 April 2007 to 31 March 2008. Reading a few financial reports shows that these results did not reflect the full price of the recent oil price hike as BA had hedged "well over half of that years annual fuel requirements at prices ranging from $82 to $90 a barrel."
Currently oil is trading at approx $126 a barrel. That is 40% higher than the BA upper hedged position of 07/08 of $90 a barrel.
The BA £883m profit is after a £2.1bn fuel bill. If BA have to spend 40% more on fuel in 08/09 this fuel bill would become £2.94bn - an increase of £840m. Which happens to be approximately equal to last years profit.
Also let's not forget that oil is currently trending persistently upwards and other 'experts' have predicted $200 a barrel. Ever increasing fuel prices will turn last years black ink after net profit into FY08/09's red ink for net losses.
Your analysis is looking solely at the past. FR/EZY/BA management along with all other airline management ought to be forward looking. They are worried about where the oil price is going. Ryanair is unhedged at the moment if i'm not mistaken and i don't know about the others. So while you may hope the airlines will simply report reduced profits i think that if oil continues at this high price then they will be reporting losses. We are seeing quarterly reports, and annual reports which are historic looking, wheras management are looking at monthly management accounts, advance bookings, loads and yields, and budgets which will reflect a range of scenarios.
I would guess that chiefly they are worried about what will happen the bottom line if oil is $120 a barrel, or $110 a barrel or $150 a barrel. Also they will be looking at what will happen if the load factor drops or the yield drops as a result of slowing consumer demand.
If the economy continues to slow then pax will surely cut some non essential travel, companies will reduce travel budgets. This will affect all airlines in some shape or form.
EZY and FR will probably pick up some price sensitive travellers who choose a budget carrier for a weekend break and save a few bob on a legacy carrier's fare, but you ignore the potential loss of revenue to the budget carriers some of whose pax simply choose not to fly for the same reason as the BA traveller switched to a low fare carrier. PResumably under pressure with mortgage repayments, petrol, home heating oil, food price increases and whose job security may be under threat.
I believe FR are grounding more aircraft through the winter than was the case last year, the BA announcement said that they were reviewing costs, capacity etc.
The strongest airlines will survive. FR has a cash mountain to ride it out. I presume BA/EZY do also. But you can be certain that Messrs O'Leary, Walsh and Harrison? will be taking steps to ensure that they minimise losses.
WWW is making the point that in the current economic climate that demand for new low houred pilots is certain to decline/cease in the short term. I believe he is right.
From reading this thread and the reactions to many of WWW's comments, many people seem to think that WWW is so pessimistic that he can't sleep at night for worry that the sun might not rise tomorrow. But his words of caution and advice to wannabe's seems to boil down to:
1. Demand for low houred pilots will decline/cease in the near term as a result of the wider fall out from a slowing economy and a rising oil price.
2. Avoid taking on £60k of debt in the anticipation that in 14 months time, with the only qualification to your name being an fATPL you will be able to walk into a RHS and repay £1k a month comfortably.
3. By all means continue training but do it at a pace that your current income enables you to afford whilst not putting the house, car, or family relationships in jeopardy.
4. The FTO's have a vested interest in selling you flight training so whilst they point to an imminent pilot shortage and encourage you to enrol on their course that perhaps the true prospects aren't quite as rosy as they will lead you to believe.
To me they seem sensible words of advice, from someone who is a skipper with a loco, has been an instructor at a big integrated FTO, has at least 10 years experience of the industry at the coal face, who is clearly well versed in economics, and whose wife works for a big bank which I think is a PLC.
This is hardly the ramblings of a drunk at the bar of your local.
Listen to all the advice then make up your own mind. Alternatively clamp the Peltors tightly over your head, ignore that Met and Notams and hope that in 14 months time you walk into the RHS of that A380. Carlsberg don't do pilot recruitment but if they did...
Thanks for that summary Vin - very accurate.
I'm not taking any pleasure in this. A perception that I am is more likely a displacing of anger from what I am saying onto who is saying it i.e. shooting the messenger. My airline will be badly hurt if we have a 1990s style recession. Pay rises won't happen, bonuses won't be paid, share options will not vest, base transfers will not happen and generally life will be a lot less sunny than has been the case in recent years at Weasely Towers. I have close friends who are hanging on by a financial fingernail and a full scale house price crash and recession will them really struggle and possibly lose their home. This is serious stuff.
A major problem with Wannabes is that they often have no idea about history. Most were in school or were a twinkle in their dads eye when the last recession and house price crash hit the UK. There is nobody out there that teaches you about the topic of airlines and recessions. For that reason I do take it upon myself to push out the lessons of history and provide warnings.
I make no apology for that. Its a free world. You can read what I write and ignore it, discount it or believe it. At least you've considered the opinion and then formed your own. Which is the point of this place.
To be a better informed wannabe.
Good luck,
WWW
I'm not taking any pleasure in this. A perception that I am is more likely a displacing of anger from what I am saying onto who is saying it i.e. shooting the messenger. My airline will be badly hurt if we have a 1990s style recession. Pay rises won't happen, bonuses won't be paid, share options will not vest, base transfers will not happen and generally life will be a lot less sunny than has been the case in recent years at Weasely Towers. I have close friends who are hanging on by a financial fingernail and a full scale house price crash and recession will them really struggle and possibly lose their home. This is serious stuff.
A major problem with Wannabes is that they often have no idea about history. Most were in school or were a twinkle in their dads eye when the last recession and house price crash hit the UK. There is nobody out there that teaches you about the topic of airlines and recessions. For that reason I do take it upon myself to push out the lessons of history and provide warnings.
I make no apology for that. Its a free world. You can read what I write and ignore it, discount it or believe it. At least you've considered the opinion and then formed your own. Which is the point of this place.
To be a better informed wannabe.
Good luck,
WWW
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WWW, as I said, I don't necessarily disagree with the message. Having been in the aviation business for a mere 23 years, I have also seen the highs & lows, suffered the uncertainty of where I will be next week/month/year and, without exception, always seen a recovery. Please do not patronise and assume that I have some form of displaced anger.
My point was the 'school teacher' method of delivery. Anyone who reads the newspapers can see that, in all aspects of life, people will need to think very carefully before spending money in the short/medium term. Please do not assume that everyone who reads your monologues is a spotty teenager just out of school.
Anyway, the Thierlet Diesel malarkey will undoubtedly slow down output from the schools for quite a while.
My point was the 'school teacher' method of delivery. Anyone who reads the newspapers can see that, in all aspects of life, people will need to think very carefully before spending money in the short/medium term. Please do not assume that everyone who reads your monologues is a spotty teenager just out of school.
Anyway, the Thierlet Diesel malarkey will undoubtedly slow down output from the schools for quite a while.
As a middle aged man with decades in the business of aviation then perhaps I can understand that you might find me annoying telling you something you already know plenty about thank you very much. Nevertheless part of the audience is composed of spotty teenagers just out of school.
You are old enough and ugly enough to look after yourself and if I patronise you then you'll just have to dry your own eyes and get over it.
Cheers
WWW
You are old enough and ugly enough to look after yourself and if I patronise you then you'll just have to dry your own eyes and get over it.
Cheers
WWW
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Anyway, the Thierlet Diesel malarkey will undoubtedly slow down output from the schools for quite a while.
If airlines can survive this year, the sun will shine again next year.
But Saudi Arabia -- and many economists -- say the high prices are a result of market speculation, the weak dollar, and demand from the developing world rather than a shortage of supply.
"We will raise production when the market justifies it. This is our policy," al-Naimi said during Bush's first visit in January. "Our interest is to hopefully keep supply matching demand with minimum volatility in the international oil market," he added.
"We will raise production when the market justifies it. This is our policy," al-Naimi said during Bush's first visit in January. "Our interest is to hopefully keep supply matching demand with minimum volatility in the international oil market," he added.
Their explanation of limiting volatility is justified. Imagine everyone starting to use alternative fuel or energy because of sky-high oil prices... it would be the end for the Saudi's.
Speaking of alternative energy, it seems that general aviation at least will be spared, no matter what happens with oil. Lycoming is willing to introduce and certificate ethanol piston engines.
http://blog.wired.com/cars/2008/04/embraer-sells-i.html
Embraer also has been selling ethanol conversion kits for customers who purchased earlier versions of the plane. The kits, manufactured by Textron Lycoming, sell for $240,000. Embraer says that in addition to reducing fuel costs, converting an Ipanema to ethanol cuts maintenance and operating costs by 20%.
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Always look on the bright side of life..
Thx WWW & VD for your posts, very enlightning. I am one of those individuals that was a twinkle in my dads eye when the last recession hit and having you explain things clearly is appreciated.
Thx WWW & VD for your posts, very enlightning. I am one of those individuals that was a twinkle in my dads eye when the last recession hit and having you explain things clearly is appreciated.
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So with the demand for oil ever increasing along with the costs, the amount of oil ever decreasing, where does that leave the industry even without the oncoming recession? At $200 a barrel seats will be out of most peoples leagues, any new technology would likely cost so much to implement that most airlines would go bust trying. Whats the future of the industry then? Opinions?
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I have been following this thread for a while (in a fingers in ears, eyes shut, while singing LA LA LA kind of a way). However the more I read, the less I can carry on in my state of blissful ignorance.
Having just finished my IR and heavily in debt, I think now is a good time to admit 'I'm scared'. I'm off to find a short pier so I can take a long walk off it.
YS
Having just finished my IR and heavily in debt, I think now is a good time to admit 'I'm scared'. I'm off to find a short pier so I can take a long walk off it.
YS
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I am no longer a Wannabe, but perhaps a would-like-to-have-been: having chased the dream for several years (although never undergoing any commercial training), I took the difficult decision not to continue, on the grounds that my age and financial position represented a risk that was higher than I was prepared to accept, coupled with the fact that, painfully - though I cannot be certain - I do not think that my personality is best suited to a career as an airline pilot. I do, however, retain an interest the industry and the situation for people entering it, along with a continuing passion for aviation; and I am finding this thread extremely interesting and illuminating. My question is this: It is clear that the advice (of WWW and others) to people contemplating entering training is to hold off from beginning, or take it slowly, because of the gloomy economic outlook. But what about those who have already started training and are not in a position to vary the speed of the course, ie. those on integrated courses, and those who have a start date that cannot be changed? I appreciate that these people are unfortunately in a much worse situation, but is that anything that they can do to protect themselves, even slightly, from the risk of losing all that money (and the resulting long-term debt) in the name of a qualification that cannot be used?
Last edited by bathtub; 17th May 2008 at 21:34. Reason: Why doesn't my writing show up as two paragraphs, as written?!
PPRuNe Handmaiden
The only way they can protect themselves is to work as hard as possible to get the best grades and first time passes. This might help them get a recommendation for a job.
They may have to set their sites lower. Rather than believe that a jet job is owed to them that a turboprop job in the back blocks of Scotland is a great offer.
Rather than sit and wait for a job to fall into their laps to get out and head to Africa etc to get any job going.
Now, if they have a huge debt to service they'll need to talk to their bank manager ASAP before they get into trouble. If they can't or won't leave their home to get a flying job then they'll have to accept a non flying job.
Believe it or not, an adventure in Africa or blasting around the Scottish Isles in a turboprop will be fantastic. Only problem, that's not the dream the FTOs sell.
They may have to set their sites lower. Rather than believe that a jet job is owed to them that a turboprop job in the back blocks of Scotland is a great offer.
Rather than sit and wait for a job to fall into their laps to get out and head to Africa etc to get any job going.
Now, if they have a huge debt to service they'll need to talk to their bank manager ASAP before they get into trouble. If they can't or won't leave their home to get a flying job then they'll have to accept a non flying job.
Believe it or not, an adventure in Africa or blasting around the Scottish Isles in a turboprop will be fantastic. Only problem, that's not the dream the FTOs sell.
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Only problem, that's not the dream the FTOs sell.
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blasting around the Scottish Isles in a turboprop will be fantastic
I know of 2 guys this month, FI's with less than 500 hours TT who have secured good turbo-prop jobs in the UK...and we just got a 7.2% payrise!!! yellowsubmarine, you've now got the qualifications, secure yourself with some sort of a job, anything! Things are not dead yet, still a bit of 'movement'. We've all been where you are!
Rex - did you miss the part about BA grounding swathes of its fleet this winter?
http://business.timesonline.co.uk/to...cle3953811.ece
If you would like to point out which of my predictions post Sept 11th 2001 were inaccurate I would be grateful. The job situation for Wannabes was dire for two good years and only really started recovering towards the end of 2003. That was a loooong time if you had to keep renewing your IR and try to maintain some kind of currency.
I know you've got a vested interest insofar as you are already commited to an Integated frzn ATPL path. Please don't resent others trying to help people behind you in the system avoid a similar mistake.
Cheers
WWW
http://business.timesonline.co.uk/to...cle3953811.ece
If you would like to point out which of my predictions post Sept 11th 2001 were inaccurate I would be grateful. The job situation for Wannabes was dire for two good years and only really started recovering towards the end of 2003. That was a loooong time if you had to keep renewing your IR and try to maintain some kind of currency.
I know you've got a vested interest insofar as you are already commited to an Integated frzn ATPL path. Please don't resent others trying to help people behind you in the system avoid a similar mistake.
Cheers
WWW