Global airlines fear oil rally as losses mount
Written on June 8, 2009
Global airlines called on Monday for concerted action to prevent another runaway surge in oil prices as the International Air Transport Association nearly doubled its forecast of industry losses to $9 billion in 2009.
The head of the Geneva-based airline lobby lambasted “greedy speculation” in oil markets and accused governments of squandering money raised from aviation while carriers suffer from still slumping demand.
“This is the most difficult situation the industry has faced,” IATA Director General Giovanni Bisignani told the aviation body’s annual meeting in the Malaysian capital.
“I am a realist. I don’t see facts to support optimism.”
However, John Leahy, commercial director at European aircraft manufacturer Airbus, said that while 2009 would be tough, plans by United Airlines to order as many as 150 new planes from Airbus or rival Boeing Co showed the market was starting to turn.
“Cancellations are not as much of an issue as deferrals. I don’t think we’ll have that many more cancellations,” he told Reuters in an interview.
OIL PRESSURE
IATA, the voice of more than 200 airlines, has repeatedly warned of a grim year for carriers as global recession shrinks passenger demand and weak financing drives down cargo trade.
Conditions have worsened after the outbreak of H1N1 swine flu caused a worldwide health scare and as oil prices — until recently a sole bright spot on the horizon after peaking near $150 a barrel last year — climb again unique business cards.
“The risk we have seen in recent weeks is that even the slightest glimmer of economic hope sends oil prices higher. Greedy speculation must not hold the global economy hostage,” Bisignani said.
Prices for jet fuel in Singapore have jumped almost 60 percent since bottoming out at $46 a barrel in March.
Still, IATA estimates the industry fuel bill will decline by $59 billion to $106 billion in 2009, or 25 percent of costs versus 31 percent in 2008, a year of extraordinary volatility.
As the downturn bites, more consolidation in the airline industry was “definitely a possibility,” Leahy said.
Shares of China Eastern Airlines and Shanghai Airlines were suspended on Monday after media said the two loss-making carriers may merge.
Singapore Airlines, which tried unsuccessfully to buy a stake in China Eastern last year, was still keen on acquisitions in China and India, its CEO said.
Filed in: term.