US airlines may lose $US13b
Bloomberg says that airlines may lose as much as $US13 billion in 2008 as surging fuel prices outpace fare increases, the chief of the Air Transport Association told a Senate committee.
This year’s financial results will be ”on par” with the industry’s worst ever as carriers’ combined fuel costs reach $US61 billion, ATA chief executive James May said. The record annual loss is $US11 billion in 2002, according to the ATA.
”I don’t think anybody predicted this extraordinary jump in prices,” said May, whose group represents the biggest US carriers. ”It’s the sole issue, it is the sole issue,” affecting airlines’ financial performance.”
May forecast a profit of as much as $US4.5 billion for US carriers in January and later projected a ”multibillion- dollar” loss. His updated forecast today was for a loss of $US7 billion to $US13 billion.
American Airlines, United Airlines, Delta Air Lines, Continental Airlines and other carriers have said they will ground as many as 378 planes and cut at least 10,300 jobs in response to the jump in fuel costs.
The higher price also has caused a drop in new plane orders and the discontinuation of service to 100 communities, May told a Senate Agriculture subcommittee. That number may grow to 200 should prices continue to climb.
Jet fuel for immediate delivery in New York Harbor fell 1.4 cents to $US3.93 a gallon today. The price hit a record $US4.09 a gallon on May 21. Fuel has jumped 81% in the past year, surpassing labor as the US airlines’ largest expense.
May’s fuel-cost estimate marks an increase of about 2.5% over the projection he gave May 13, when he said airlines would spend $US59.5 billion. The record is $US41.2 billion, set last year, the trade group has said.
A report by the Mole from Bloomberg
John Alwyn-Jones
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