Airlines Stand To Lose As Much As $6.1 Billion On Fuel This
It's the absolute worst-case scenario... they hope. The
International Air Transport Association, whose members account for
93 percent of international traffic, projects airlines may report
losses totaling $6.1 billion for 2008, as they face soaring jet
That projection is based on oil prices hovering close to the
$135-per-barrel record reached May 22, reports Bloomberg. Prices
have since dropped about $8 per barrel; IATA's official projection
is for "only" a $2.3 billion loss, based on an oil price closer to
$107 per barrel.
Still, even that mumber is a stunning reversal of the
group's earlier projection of a $4.5 billion net industry
profit. If it proves accurate, this will be the worst year for the
airlines since 2003.
IATA members amassed a net profit of $5.6 billion in 2007, their
first profitable year since the September 11, 2001 terrorist
attacks. But CEO Giovanni Bisignani told attendees at the group's
annual meeting in Istanbul, "Skyrocketing oil prices are changing
everything. The situation is desperate and potentially more
destructive than our recent battles with all the horsemen of the
UK-based business class
airline Silverjet last week became the latest of a dozen airlines
to ground its planes after running out of operating cash. Bisignani
called the combination of steep fuel price increases, slowing
demand and tightening global credit a "perfect storm," and the
For the moment, manufacturers are putting on brave faces...
while also preparing for potentially hundreds of cancellations of
new plane orders. Airbus chief salesman John Leahy told the group
he remains hopeful that current prices are merely a "bubble."
Bloomberg reports a unanimous consensus among attendees to call
on governments to regulate airports more tightly, facilitate
mergers, cut taxes, invest in new planes for state-run carriers and
take steps to ensure that the cost of energy reflects its true
value. IATA also warns labor unions to limit pay claims.