American Airlines hit by fuel bill
AMERICAN Airlines, the world's largest carrier, today said soaring jet fuel prices will increase costs by $300m (£165m) in the third quarter and by $1bn for the whole year.
The new cost estimate for 2004 is $300m greater than previous guidance and caps a miserable eight months for most carriers.
Many, including British Airways, have had to slap fuel levies on tickets, but these have only partially covered the shortfall. AMR, American's parent, says it cannot even take that measure as revenues are falling in an intensely competitive climate.
Analysts now predict huge losses among US carriers in particular, compared with expectations of modest profits, or at least break-even, at the start of the year.
According to the Air Transportation Association of America, an average price of $39 per barrel for Brent crude oil suggests that the industry worldwide will lose about $10bn in 2004. That compares with a record loss of about $13bn in 2001.
The association also estimates that US airlines need a crude oil price of about $31 a barrel to break even.
Meanwhile, a group of investors who collectively own more than $1.4bn of Delta Air Lines debt have blocked the troubled carrier's attempt to restructure its lending agreements.
The group, which calls itself the Committee of Senior Secured Aircraft Creditors of Delta Air Lines, indicated earlier this week that it needed more time to fully understand Delta's attempts to restructure itself.
