are we looking at the teens again??, page-3

food for thought...

Warren Buffett who famously quipped that if he had been at Kitty Hawk in 1903, the best thing he could have done for future investors would have been to shoot down Orville Wright, since the airline industry had, at least up to 1990, lost more money than it earned for equity investors.

Buffett's remarks underline that the airline industry has an unenviable relationship between risk and return. The reasons are straightforward: airlines have high fixed costs, and when demand falls below break even, it is difficult to lower those costs by selling surplus aeroplanes because of the low demand.