Airliners To Lose $6 Billion: One Metal Can Save Them

Airliners To Lose $6 Billion: One Metal Can Save Them - I Say Buy It Now...

Date 18/06/2008

Profit Hunter

Manraaj Singh

Read on to find out how...

If you think that the rising price of oil is causing you pain at the pump, just be glad you don’t own an aeroplane. Because, right now, I can’t really think of an industry that is more at risk from the soaring price of oil...

Just consider this one simple fact: according to International Air Transport Association (IATA) figures, the global airline industry’s costs soar by US$1.6 billion for every $1 increase in the price of a barrel of oil!

The average price of a barrel of crude oil last year was $73. This week it was a whisker under $140. And that’s still cheap, because right now, jet fuel costs about $40 per barrel more than crude oil...

So, earlier this month, the IATA revised its industry financial forecast for 2008 to a loss of $2.3 billion - a swing of $6.8 billion. It had previously been forecasting an industry profit of $4.5 billion for this year.

But it could get even worse for them. The Association estimates that, those losses could soar to $6.1 billion if oil prices remain at $135 for the rest of the year.

Just a month ago, business class airline Silverjet was forced to file for bankruptcy...

It probably won’t be the last one either.

Airlines aren’t always a bad industry to be invested in — we made 78.3% profit on Brazilian air company Copa Holdings last, year (...and took a 27.3% loss on SkyEurope Holdings in 2006...) But this is a business that we are going to stay well clear of as the price of oil heads-off into the stratosphere.

We could still profit big from this industry...

You see, with airlines being squeezed by the soaring cost of oil, they’re desperately looking for ways to improve fuel economy. This isn’t an option for them. It’s what they’re going to have to do in order to survive....

So the airlines are now replacing their older aircraft with new jets with more efficient engines. And that has triggered a massive surge in the price of several rare metals that are used to improve the efficiency of jet engines...

Just look at the price of rhenium. It’s an extremely rare metal — in fact, it was the last naturally-occurring chemical element to be discovered. But demand for it has been going through the roof — and so has its price. In early 2006, you could have bought a kilogram of the metal for about $1000. Yesterday it was trading at $11,250. That’s a 1025% gain in a little over two years. Not too shabby... Right now, this stuff is worth only a little bit less than half the price of gold....but we aren’t hearing about it in the headlines.

Rhenium has been leading the charge, but there is a whole group of these other rare metals that are seeing their price surge as well, like chromium, cobalt, tantalum, titanium, vanadium...

The airlines’ drive for fuel economy has translated into strong demand for metals used in the production of jet engines’ super-alloys. So, we’re now seeing a boom in demand for from jet engine manufacturers like Rolls-Royce and General Dynamics.

By combining these rare metals with other industrial metals, they create strong super-alloys resistant to heat, allowing aircraft engines to run at much higher temperatures and therefore saving fuel.

With the airlines now struggling for survival, you can bet that demand for more efficient engines and these exotic metals is going to continue to boom.

How to play this boom

The problem for investors trying to profit from this though, is that most of them are traded off-market. You have to invest in the companies that actually produce them. And that’s where our latest investment recommendation comes in.

Located in a country that holds just about every element known to man - the company we are talking about has the lion’s share of one of the most valuable of these rare metals...

And that puts it in a very sweet spot.

Because without its considerable bounty, the global airline industry can kiss its hopes of greater fuel efficiency goodbye...

At Profit Hunter we are about to reveal just what this play is... click here now and get in on the ground floor...

Please note: Past performance is not a reliable indictor of future results.

Regards,

Manraaj Singh
Editor
Profit Hunter
P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.

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