Friday, January 22, 2010

Oil Creates Decennis Horribilis for Airlines

How long can an entire industry operate at a loss?  For the airline industry it is ten years and counting.  The primary reason for airline woes has been high oil prices.

Airlines globally will spend close to US$150 billion on jet fuel this year.  The global airline industry is expected to lose US$5.6 billion during 2010 if oil prices average US$75 per barrel (basis ICE Brent crude).  This follows an industry loss of US$11 billion in 2009 capping a decade of losses:
"Between 2000 and 2009, airlines lost US$49.1 billion, which is an average of US$5.0 billion per year,” said Giovanni Bisignani, IATA’s Director General. (source)
The jet fuel share of total costs spent running global airlines has roughly doubled since the early part of the decade:
2000  14%
2001  13%
2002  13%
2003  14%
2004  17%
2005  22%
2006  24%
2007  28%
2008  32%
2009  26%
2010  26%*
*IATA Forecast
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