Posted on: Monday, June 7, 2004
World's airlines may lose $3 billion on higher oil prices
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By Tan Hwee Ann
Bloomberg News Service
Airline carriers worldwide will lose as much as a combined $3 billion on international routes this year if crude oil prices average $36 a barrel, the International Air Transport Association said.
The industry will break even if the price averages $33 a barrel, Giovanni Bisignani, director-general of the association representing more than 270 airlines worldwide, told airline executives in Singapore today.
Airlines are trying to recover from $30 billion of losses in the past three years, when terrorism, war and the SARS virus cut travel, forcing some carriers, including United Airlines' parent UAL Corp., to seek bankruptcy protection.
Jet fuel prices, which usually account for about 16 percent of airlines' costs, reached $48.65 a barrel on May 17, the highest level since 1990.
"This year was meant to be the first profitable year for our industry this century," Bisignani said. "The price of oil could add up to $1 billion per month to our costs and deny us profitability yet again."
