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Airlines Struggle With Costs Of Unsold Jets

Bloomberg News (11/19, Schlangenstein) reports, "American Airlines, United Airlines and Continental Airlines Inc., stung by fuel costs and a drop in traffic, face a new challenge: what to do with planes valued at $2 billion now idled or set to be grounded through 2009. With virtually no US buyers for the 276 mostly older, less-efficient jets, the carriers are shopping the aircraft in emerging markets such as Russia while prices tumble and frozen debt markets damp sales." For example, "Continental said last month that credit snags for three unnamed buyers delayed the sale of 20 Boeing Co. 737-500 jets. The fourth-largest US airline said it's holding cash deposits and would be entitled to damages should the deals collapse." Bloomberg adds, "Age and operating costs helped shape airlines' decisions on which aircraft to unload as jet fuel surged 53 percent this year through July. ... Any unsold aircraft will be parked. Those still under purchase agreements or on leases that can't be terminated early will continue to drain cash."