Rising Jet Fuel Costs Weigh On Global Commercial Airlines; Average Profit This Year Should Be 1.6%: IATA

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Tyler Tony Tyler, the director general and CEO of the International Air Transport Association, cites "worryingly high" jet fuel costs as the main reason for low industry profits.

Global commercial airlines will post, on average, a 1.6 percent profit this year as the industry struggles with rising jet fuel costs, the head of the International Air Transport Association, or IATA, said Wednesday.

"While in 2008 the industry sustained a net loss of 4.6 percent of revenues, equivalent to $26 billion, the forecast for 2013 is for a modest net profit of 1.6 percent of revenues, equivalent to $10.6 billion," said Tony Tyler, the director general and CEO of the IATA.

“Owing to the structural changes and efficiency gains achieved over the past several years, we are keeping our heads above water, but just barely,” Tyler said.

The industry's fuel bill last year totaled $209 billion, which was about $33 billion higher than in 2011, and "this year we are expecting to pay an additional $7 billion," he said. 

"Fuel now represents 33 percent of our operating budget, and the consensus forecast in March was for jet fuel to average $130 per barrel [42 gallons], which is $3 more per barrel than in 2008 when our industry was nearly brought to its knees by the oil bubble. In recent weeks, we have seen some easing of prices; nevertheless, they remain worryingly high when measured against historical averages."

Separately, IATA released data showing jet fuel prices dropping more than $25 per barrel in April. Jet fuel has not seen its current price level since mid-2012, when a United Nations embargo on Iran affected oil supply, the IATA said.

 

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