DRIP. DRIP. DRIP.

Enough fossil fuel talk please.

Chapter 2 of airline recovery plans is all about cutting costs that will lead to positive cash flow. Chapter 1 was all about raising as much cash as possible. It is revenue, not traffic, that is critical to achieve the objective.

Input costs have a lot to say about the price of a ticket, not all. For an airline, the operating costs of labor and fuel are critical. The price of labor is mostly controllable - market pressures do exist. As for the price of oil, controllable is a wish. Think hedges.

Over the last month or so, the price of oil has had my attention.

On 4/20/20 the price of a barrel of WTI was actually less than $0. -$36.73 to be exact as global demand waned, storage facilities were full and traders began to panic about the futures contracts they held. As for understanding supply, think geopolitics.

My morning Bloomberg reading found an article about whispers of $100 oil occurring in some trading circles. Improving fundamentals, global stimulus and speculators have some talking about the price point some time in 2022.

High oil prices have not always been bad for ticket prices from an airline perspective. They may impact the decision of a prisoner airline facing the jailbreak dilemma though.