World airlines may lose billions of dollars because of high fuel costs

SINGAPORE (AP) _ The sharp spike in oil prices may cost the world's airlines billions of dollars in losses this year and further damage the industry's recovery after a series of setbacks, the head

Monday, June 7th 2004, 9:21 am

By: News On 6

SINGAPORE (AP) _ The sharp spike in oil prices may cost the world's airlines billions of dollars in losses this year and further damage the industry's recovery after a series of setbacks, the head of the global air transport association said Monday.

``Last year we survived the four horsemen of the apocalypse _ SARS, the conflict in Iraq, terrorism and the economy,'' said Giovanni Bisignani, director-general of the International Air Transport Association, or IATA.

``Now a fifth horseman, the price of oil, could add up to $1 billion per month to our costs and deny us profitability yet again,'' he said.

His estimate was based on crude priced at $36 a barrel, he said.

U.S. light crude stood at $38.32 per barrel on Monday, about 10 percent down from a 21-year high of $42.45 last week.

``If oil prices average $33 (a barrel), we break even,'' he said about the state of the industry at the World Air Transport Summit in Singapore. ``At $36, we will lose over US$3 billion.''

This was meant to be the first profitable year of the century for the airline industry, Bisignani, the former head of Alitalia, said.

Since 2001, the airline industry has lost close to $31 billion, the IATA said Monday in its annual report.

Bisignani said the association's estimates of losses had already taken into account fuel surcharges some airlines have imposed or are considering adding to the price of passengers' tickets.

The global airline association brings together 275 companies spanning 136 countries and represents almost 99 percent of the world's international air traffic.