Major U.S. airlines say they are not expecting a significant dent in quarterly profits despite soaring jet fuel costs tied to the war in the Middle East adding hundreds of millions of dollars in expenses.
Executives from Delta Air Lines, American Airlines and United Airlines told investors Tuesday that strong ticket sales are helping offset those higher costs, with all three carriers reporting record bookings this year.
Jet fuel prices have jumped since the war began on Feb. 28 and strained global oil supplies, particularly around the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s oil passes. The volatile crude oil price that is driving gasoline prices higher has had the same effect on jet fuel, which is one of the airline industry’s biggest expenses, typically accounting for about one-quarter of operating costs.
The price for a gallon of jet fuel rose to $3.93 on Tuesday, up from $2.50 the day before the war broke out, according to Argus Media. Delta CEO Ed Bastian says that amounts to roughly $400 million in additional costs so far. Executives at American and United reported similar figures while speaking Tuesday at the annual J.P. Morgan Industrials Conference.
For now, most major U.S. airlines say strong demand for air travel is helping absorb the additional costs.
“It’s across all segments, covering corporate, covering international, covering premium leisure, covering main cabin, covering our domestic system,” Bastian says. “We’re seeing strength in every market that we look at.”
Read the full story from The Associated Press.
