According to a recent Fortune article, analysts estimate that American Airlines loses $3.3 million dollars a day. Imagine how much good you could do in the world, or for yourself, with that kind of money! That means every day the airline is in operation, they spend $3.3 million more than they earn from ticket sales. Corporations and governments can do things that us normal folks can’t: spend millions of dollars more than they earn, daily. Will American Airlines be the next large airline to collapse, following the five carriers which have already filed for bankruptcy this year alone?

American Airlines is actually the only “so-called legacy carrier” that hasn’t yet filed for Chapter 11 bankruptcy. The airline industry as a whole is stumbling for several reasons, particularly the rising costs of gasoline for airplanes. Southwest Airlines is pulling away from the pack because of some prudent hedging in futures markets, allowing them to pay only $2.01 a gallon for jet fuel. Don’t you wish you could be paying only $2 a gallon for your own (land-based) vehicle?

A flight from New York to Los Angeles used to only cost an airline $7,781 dollars in 2004. Now, in 2008, a mere 4 years later, it costs $27,495. Dallas to Washington D.C. rose from $1,721 to $6,081. Think about those increases spread out over the hundreds of flights flown by various airlines and you can easily see why these airlines are suffering. But after 9/11 the government bailed out airlines, should they do it again?

We might not have the business acumen and money sense required to be a CEO of a small mousetrap factory, but even we know that a business can’t last long spending more than they earn.

[Fortune]

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