Europe crisis keeps airlines from benefitting from jet-fuel drop

19 June 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Despite significant drops in prices for European jet fuel barges and cargoes, the eurozone economic crisis is preventing the region's airline carriers from benefitting from lower costs – as a trade-group economist discussed on Tuesday the challenges facing the industry.

Barge prices were at $897-900/tonne (€709-711/tonne) FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp). This was the lowest price since 27 January 2011.

International Air Transport Association (IATA) chief economist Brian Pearce said that airlines in Europe face a difficult year.

“In a strong time of economic growth, airlines can handle the increase of crude and jet fuel prices, however the decrease in jet fuel costs are not enough to counterbalance the economic decline and uncertainty,” Pearce said.

IATA recently downgraded its profit expectations for the European airlines worst hit. Those airlines are expected to post losses totalling $1.1bn in 2012.

“Asia and the Middle East are improving and the US is to some extent,” he said.

“It is all dependant on the economy and the downside risks from the eurozone," Pearce said. “We have already seen airlines go bankrupt and the pressure will increase.”

A European fuel buyer said that current operating conditions were a difficult balance. However, the economic turmoil is yet to result in a reduction of passenger demand.

($1 = €0.79)

By: Kate Wilcock
+44 208 652 3214

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