Oil price surge may delay airline recovery

Soaring fuel prices could delay a return to profit for the US$450 billion (euro350 billion) airline industry, its main global body warned Monday, as cost-cutting efforts fail to keep pace.

The International Air Transport Association, hosting airline executives at its annual meeting, raised its 2006 net loss forecast to US$3 billion (euro2.3 billion) from US$2.2 billion (euro1.7 billion).

Unless the price of oil stops rising, IATA chief Giovanni Bisignani said, the sector is unlikely to meet its goal of averting a seventh straight year of net losses since the Sept. 11 attacks by breaking even next year.

A recent slowdown in the industry’s recovery comes despite sustained efforts to control costs. Total net losses fell steadily to US$3.2 billion in 2005 from US$13 billion in 2001.

Business Week