U.S. Airlines May Lose $5 Billion on Fuel Costs

U.S. airlines will probably lose at least $5 billion this year along with more industry jobs because of high fuel costs, the head of the airlines’ main trade group warned Congress on Thursday.

Over the last four years, airlines have lost $32 billion during the industry’s worst financial downturn. The airlines blame their woes on crude oil prices that have more than doubled, increased security costs and low fares brought on by intense competition.

“We are projecting additional losses of at least $5 billion in 2005,” said James May, president of the Air Transport Assn. “If oil stays high and our taxes with it, I expect more jobs lost, more flights cut and more airlines in crisis.”

Testifying before a House subcommittee looking at the effect of high energy costs, May forecast U.S. airlines will pay $6.8 billion more for fuel this year than in 2004.

As a result, May said the airline industry was losing an estimated $17,000 every minute.

May said even though flights were more crowded, passengers were paying less for tickets because of intense competition, which made it difficult for airlines to offset jet fuel costs.

“They’re full all right. Full of cheap fares and expensive fuel,” he said.

About one-fourth of U.S. passengers pay $200 or less, including taxes, for a round-trip ticket. Two-thirds of passengers pay $300 or less.

Airlines consumed 18.6 billion gallons of jet fuel last year. Each penny rise in a gallon of fuel increases the industry’s annual operating expenses by $186 million, he said.

“Viewed from an employee perspective, every $1 increase in the price of a barrel of crude puts another 5,500 airline jobs at risk,” he said.