Cars and Drivers
As Eos Goes Under Risks Rise At AMR (AMR)(DAL)(UAUA)(CAL)(NWA)
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Eos was an extremely odd duck of an airline. It flew only one route, from New York’s JFK to London. It was an all business class affair, but, with a recession in full-swing flying is becoming a luxury, even for some businesses.
The bankruptcy of Eos over the weekend serves to remind the industry that rising fuel prices cannot be offset by increased ticket prices.
The managements at Delta (DAL) and Northwest (NWA) have decided that there is strength in numbers. They are merging and my be followed into the marriage chapel by Continental (CAL) and United (UAUA). There is scant evidence that merging two big carriers saves money while retaining customers But, at least it is a desperate attempt at staying open for business.
AMR, (AMR), parent of American, may be destined to stay single. It has the most debt of any of the big carriers. No other company wants to take that on in a merger.
All of that makes AMR the most likely candidate to go into Chapter 11 next. With oil at $120, Wall St. can bet on it.
Douglas A. McIntyre
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