Airlines expect heavier drag on profit growth from rising fuel costs
Major airlines expect fuel costs to keep rising through the end of the year, putting a dent in profits for an industry that has seen earnings growth in 2023
NEW YORK (AP) — Major airlines expect fuel costs to keep rising through the end of the year, putting a dent in profits for an industry that has seen earnings growth in 2023.
United Airlines, Delta and American have all seen fuel costs rise since the beginning of the year along with commodity prices for oil. Strong demand has so far helped profits grow each quarter. But all three airlines are forecasting yet another increase in costs during the current quarter and warning that it could hurt their bottom lines.
The higher fuel costs could potentially lead to pricier fares for travelers at a time when high inflation is still squeezing consumers. Airlines are also worried about travel demand slumping because of global conflicts, particularly the war in Gaza. The U.S. has issued a global advisory for citizens overseas because of rising tensions and the potential for violence.
Fuel prices and the war’s impact on travel to Israel both factored into United Airlines disappointing financial update. The company expects profit of $1.50-$1.80 a share, depending on when travel resumes to Tel Aviv. That would mark a sharp drop in profit from a year ago after two quarters of solid gains.
