Discuss the impact of the global financial recession on our lives Essay

Discuss the impact of the global financial recession on our lives - Essay Example Most of the countries today are still under the influence of the global financial recession that occurred. Apart from affecting a nation as a whole, the global financial crisis had an impact on people at the individual level. Today, most individuals still suffer under the effects of the global financial recession that have persisted. Therefore, the global financial recession continues to have an impact on the lives of people today. A major impact of the recession is that many people lost their jobs. The economic recession had a negative impact on companies, including small and big companies. These companies were a major source of employment for many people. When the companies became bankrupt and others broke down as a result of the economic recession, they were forced to lay off their employees (McKibbin W. and Stoeckel 2009). Therefore, many people were faced with the problem of joblessness. Today, most companies still struggle to improve their financial health after the recession. For this reason, these employ few or no new employees, and they have reduced benefits for existing employees. Therefore, most employees continue to feel the pinch of the recession today. The global financial crisis also led to reduced access to credit. During the recession, many people were unable to access credit, including loans for their personal and commercial uses. This was mainly because the recession had a negative impact on the banking and financial institutions that provide credit. This therefore, put a limit on how fast individuals could grow their business and personal lives using credit. The recession forced financial institutions to raise their interest rates, and this discouraged borrowing. Today, since the effects of the global financial recession have persisted, the interest rates on borrowing in financial institutions have remained relatively high. Therefore, most people still feel discouraged to borrow, in order to expand their businesses or build homes, among

How Increase in Fuel Prices are Effecting the Airline Industry Essay

How Increase in Fuel Prices are Effecting the Airline Industry - Essay Example This paper illustrates that since the fuel cost is one of the major costs incurred by the airlines therefore, the continuous increase in the fuel prices for the last years has been very threatening for all airlines. The major impact of increase in fuel prices is reflected in the increasing operating expenses and operating losses of airlines. Even the airlines which have been able to survive during this turmoil through their aggressive hedging options could not make targeted revenues. The rise in fuel prices has not only influenced the airlines individually but it has also influenced the entire world airline industry. According to International Air Transport Association, the profits of airlines will reduce with the rise in oil prices. The net profit of airline industry will be $8.6 billion in 2011 as compared to $16 billion in 2010. Moreover, if the unrest situation in Libya and Middle East persists then oil prices will further increase which will negatively influence the airline indu stry. At individual level, all airlines have been incurring huge losses for the last few years. The United States Passenger Airlines Industry faced a total operating loss of $4.3 billion in first three quarters of year 2008. According to the report of Government Accountability Office, the price of jet fuel was the major operating expense in 2008 and the major contributor of loss in 2008. The fuel costs were 25 percent of the total expense of the airlines in the first three quarters of 2007 however, in the first three quarters of 2008, the fuel costs became 32 percent of the total expense. In the third quarter of 2008, when fuel prices increased by 60 percent as compared to 2007, seven smaller airlines stopped their operations and many entered into bankruptcy. Today, the rise in fuel prices is continuously harming the operations of airlines around the world. Air India, the national carrier of India is facing a loss of Rs. 600 crore a month. The monthly income of the airline is Rs. 1, 100 crore whereas; the expense of airline was Rs. 1,700 crore and the increase in fuel prices was the major factor for this loss. According to Bob Herbst of AirlineFinancial, if the fuel prices remain at $105 per barrel in 2011 then the major eight airlines of the United States will have to pay more than $9 billion on fuel costs as compared to 2010. Moreover, these airlines will have to improve their revenues to breakeven to avoid any operating loss. On the other hand, a few airlines are also reporting the profits despite the high fuel costs. Korean Air reported a net profit of $29 million in second quarter of 2011 as compared to a huge loss during the same period in 2010. The airline claims that despite the high fuel prices, the airline has been able to make profits in the second quarter of 2011. Interestingly, the increase in fuel prices has also provided significant benefits to few airlines like Southwest Airlines. Southwest Airlines had the advantage over its competitors because of its hedged fuel prices. The company had hedged 70 percent of its fuel consumption at $51 per barrel when other airlines were paying $135 per barrel. However, the airline will ultimately go under the impact of high fuel prices because in 2012, the airline will be having only 15 percent of its total fuel purchases at $63 per barrel.