Skyrocketing fuel costs are hurting the entire US industry. Citing higher fuel prices, Continental chief executive Gordon Bethune no longer expects the Houston-based carrier to be profitable for the year, while economist Dave Swierenga of AeroEcon says the increase has added almost $1 billion to first quarter fuel costs, cancelling out any incipient revenue gains and "making a breakeven year unlikely".
Crude oil has averaged more than $35 a barrel recently, rather than the $28 the airline industry was predicting a few months ago, says Swierenga, formerly the chief economist of the Air Transport Association. But contracts to hedge jet fuel are expensive, and many airlines have been reluctant to commit to high prices if they think crude prices will soon fall. Swierenga says of the limited hedge protection at some carriers that "just about everybody guessed wrong".
Source: Airline Business
