Sunday, September 16, 2001

Airlines at The Crest of The Tidal Wave

Saturday afternoon I happen to catch the Continental Airlines CEO's press conference where he announced major cuts and incredible "doom and gloom" for the airlines industry.

This event forced me back to my information source, "At The Crest Of The Tidal Wave" by Robert Prechter, because I remembered some interesting comments on the transportation

...some more "brain candy"....

Saturday September 15, 11:19 am Eastern Time
Press Release
SOURCE: Continental Airlines
Continental Airlines Announces Long-Term Schedule Reduction And Furlough of 12,000 employees
HOUSTON, Sept. 15 /PRNewswire/ -- Continental Airlines (NYSE: CAL - news)
Continental Airlines announced today that it will immediately reduce its long-term flight schedule by approximately 20 percent on a systemwide available seat mile basis, and will be forced to furlough approximately 12,000 employees in connection with this reduction. "The U.S. airline industry is in an unprecedented financial crisis. We call on the President and members of Congress to take immediate action to restore the stability of this vital industry, on which our nation's economy heavily depends,'' said Gordon Bethune, Continental chairman and chief executive officer. "Our industry needs immediate Congressional action if the nation's air transportation system is to survive.'' Prior to the terrorist attacks and this announcement, Continental Airlines and its subsidiaries flew over 2,500 flights a day. The airline, which currently employs more than 56,000 people, has been the industry leader with superior operational performance, 26 straight profitable quarters, numerous national and international customer service awards, and repeated designation as one of the 100 Best Companies to Work For in America.

"At The Crest of The Tidal Wave"....published in 1995
"The airlines issue credits to reward people who fly, order flowers, take a language course, stay in certain hotels, rent cars, call long distance, or even invest in a mutual fund. This frezied purchase of customer goodwill has been paid for with future obligation, so it is simply debt, a huge debt. Already, nonpaying flyers account for 7% of the seats filled on the average flight by major carriers. When the depression arrives, that percentage will soar. The industry's debt
to its best customers is now huge, and its ability to pay it is negligible. The problem is just beginning to show up in airline's policies of further restricting the time and seats available for certificate redemption. This is only the hint of the default that is coming. Any renewed contraction in the economy will devestate the transportation industry. If you have accumulated
any frequent flyer miles, you should use them up as fast as you can."

"Only a true understanding of the nature of people's behavior as it relates to markets will allow you to reason through emotionally charged situations and deal with them properly"

"Even at this early date, we might speculate on just a few developments that appear likely. For instance, I would be inclined to expect that the Middle East and Latin America will destabilize;....wars will erupt in Asia and the Middle East....foreigners will commit terrorist acts on U.S. soil"

"So what is the right course of action? The Elliott Wave Theorist cautioned in early 1986,'Once the craze really takes hold, just be aware of what is going on, and make sure you are not caught up in the amorphous feelings of confidence, complacency and love at the ultimate top.' The reader of this book faces a difficult task, one that will put him in such an extreme minority
that he will feel isolated and unsupported. By selling all of your stocks, you will take the maverick road, and you will take it alone. I have no doubt that by the time this bull market is ending, our call for a huge crash and depression will be laughed off the street. Do not lose your perspective when the time comes. It will take great courage to make money during this bull market. However, it will take greater courage to get out near the top, because that's when the world will call you a damn fool for selling."

It forces the analyst to look at the big picture. A proper long term perspective elevates the wave analyst above the cacophony of daily news. It provides the opportunity to make sense of the great trend changes in markets and dramatic social events that accompany them."

"If you can keep your head when all about you are losing theirs...Yours is the Earth and everything that's in it" Rudyard Kipling

"Collective man will enjoy the same successes and repeat the same mistakes over and over, with minor differences in specifics, throughout eternity, although each time from a higher level of advancement. Mistakes are repeated not because people fail to learn from history, as many contend, but precisely because they do learn from history, from recent history, their own experience."

A must read......

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