Airlines Increase Capacity

"Here We Go, ‘Round Again…" Front page, center, USA Today on Tuesday, August 8: "Airlines to add year-end capacity. Fliers could see relief from rising airfares." Lord, Lord. They finally make a profit, after all of the bad years, and the first thing they do is raise capacity (that means adding airplanes, of course)! Who was it who said that the airline industry can’t stand prosperity? The USA Today article states that "decisions to add seats generally reflect greater optimism in the industry about its prospects for making money." Humphf! Does anyone remember what Warren Buffet said about the airlines way back in his annual report to stockholders for 1992? "We have no ability to forecast the economics of the investment banking business, the airline industry, or the paper industry." Folks, if Buffet, the Sage of Omaha, can’t forecast it, I’m scared of it. If I had given Buffet $10,000 to invest back in the 1960s, I would be an insanely wealthy man today. (Of course I did not have $10,000 in the 1960s nor did I know who Warren Buffet was, but I am still greatly impressed with his history). According to all the financial experts, the airlines are making a profit now to a great extent because they—painfully—cut capacity. Is it really time to increase capacity? It seems like a risky time to "bet on the come," as the old saying goes. We'd love to post your comments. Please click on the comment box at the top.