Report: Airlines sweat fuel costs

Report: Airlines sweat fuel costs

Anticipating $60 a barrel oil, carriers cut routes and bump up fares -- USA Today.

March 7, 2005: 1:39 PM EST
CNN
Source

NEW YORK (CNN Money) - After watching the price of crude steadily climb over the last year, major airlines are planning for the prospect of $60-a-barrel oil and beyond by raising fares and cutting routes, according to a report published Monday.

USA Today, citing consultant David Swierenga, said the rising cost of jet fuel will add $600 million to airlines' operating expenses for the January-March quarter, 11 percent higher than what had been budgeted.

Swiernega told the paper he now expects the airlines to lose $2.5 billion this year, making overall losses since 2000 over $33 billion.

To help cover the soaring costs -- crude has beeny trading around $53 a barrel, 18 percent higher than a month ago -- the article said some carriers had tacked on an extra $20 to round trip fares.

And last week U.S. Airways quit flying three new routes it had started from Fort Lauderdale, Fla. -- to San Juan, Panama City and San Salvador -- citing fuel costs and weak bookings, according to the paper.

USA Today also said America West gave up three cross-country routes in response to the high fuel prices.

The article said only one major airline -- Southwest -- was able to lock in most of its fuel at a lower fixed-rate, long-term contract; in Southwest's case, $26 a barrel. The other airlines lacked the cash or financial credibility to make such a deal -- all of which makes airline executives "anxious and fearful," one fuel marketer told the paper.