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$50 oil is a party at the pump

Issue Overview

Back to the Future: If this were 2005, fuel would look expensive. But in 2015, $50 oil is a party at the pump

U.S. airlines

Back to the Future: If this were 2005, fuel would look expensive. But in 2015, $50 oil is a party at the pump

November 2nd, 2015

2 min read

Issue Summary

Cheap or expensive? In 2005, as American’s CEO Doug Parker reminded investors during the carrier’s recent Q3 earnings presentation, the WTI price of oil was about $56 per barrel. Lord have mercy, U.S. airlines wailed at the time, en route to a collective industry operating loss of nearly $3b. But that was then. Ten years ago, the industry—in terms of its capacity, fleet, workforce and network—was built for the $20 oil prevailing at the start of the 2000s. Today, the industry is built for the $100 oil seen through much of the prior 10 years, so oil in the mid-$50s…

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