Airlines to lose heavily on fuel bills

LOSS: The International Air Transport Association announced a revised forecast for 2006 industry losses.

It is estimated that airlines will lose US$1.7 billion, with a fuel bill of US$115 billion calculated for an average oil price of US$68 per barrel (Brent). This is a significant improvement on the previous loss forecast of US$3.0 billion made in June that was based on an oil price of US$66 per barrel for a total fuel bill of US$112 billion.

However, stronger than anticipated economic growth has boosted airline revenues, and restructuring efforts have elevated load factors to record levels.

Airlines ended 2005 with a US$3.2 billion loss including a fuel bill of US$91 billion.

“We are still in the red, but what other industry could add US$24 billion to its second largest cost in a year and still improve the bottom line? Efficiency, hard work and a strong revenue environment have all contributed to this amazing result,” said Giovanni Bisignani, IATA’s Director General and CEO.