2 ms·
In general, Aviation is 0-profit biz. And alot of Sturt-ups and other businneses are dependent of cheap flights.
by v4us 16y ago
In general, Aviation is 0-profit biz. And alot of Sturt-ups and other businneses are dependent of cheap flights.
- wdewind 16y agoWhat are you talking about? Just because the airlines aren't doing great right now does NOT mean aviation is a 0 profit biz...
- jrw89 16y agoI think it was in the notes to a recent re-print of The Intelligent Investor or Security Analysis but it made clear that the cumulative profit of the airline industry has been negative overall (I'll try and find the reference to back it up). Of course there are some airlines that make money, but a lot that don't. Think of British Airways: essentially a loss-making pension fund with an airline on the side.
- Luc 16y agoBottom of p.7, 4th edition with preface by Warren Buffett. But note the full quote:'It is commonly accepted today that the cumulative earnings of the airline industry over its entire history have been negative. The lesson Graham is driving at is not that you should avoid buying airline stocks, but that you should never succumb to the "certainty" that any industry will outperform all others in the future.'
- v4us 16y agocummulitive profit of whole industry is 0. some people makes alot of money, but not companies.
- wdewind 16y agoBecause the companies are poorly run. This has little to do with the industry itself and air travel is clearly not going to stop anytime soon. Some companies may die, but again aviation is not a 0 profit industry, these are just shitty companies who grew beyond what they could manage.
- lkijuhyghjm 16y agoSome airlines are profitable, Southwestern, Ryanair, Easyjet, Westjet - but this is offset by national airlines which aren't. US airlines are never profitable because the more money they lose apparently the more willing people are to bail them out
- gaius 16y agoI suspect that's much like Hollywood, i.e. why if you're an actor you want a gross point (a share of the revenue) and not a net point (a share of the profit, which on paper won't exist, for tax purposes).