Airline industry to lose $2.3B

A new look at the global airline industry paints a bleak picture amid record oil prices.

The airline industry will lose $2.3 billion this year because of oil price increases, according to the International Air Transport Association.

The loss forecast by IATA, which represents more than 240 airlines around the world, contrasts with a projected profit of $4.5 billion announced in March. This marks the second time IATA has lowered its forecast this year.

The most recent forecast uses a consensus oil price of $106.50 per barrel of crude, up from the $86 per barrel used in the March forecast, IATA said. It’s possible the forecast could be adjusted again, as oil is more than $126 a barrel now.

It’s estimated that for every dollar the price of fuel increases, airline costs go up by $1.6 billion.

The total fuel cost for the airline industry this year is expected to be $176 billion — 34 percent of total operating cost, IATA said. This is a $40 billion increase from the 2006 bill.

bizjournals.com