Sky-high oil prices ‘destroying airlines profits’
20.08.08
A ‘perfect storm’ of record fuel costs and slipping demand for travel could cost global airlines $6.1 billion this year, the International Air Transport Association (IATA) said today. Painting a grim picture for the aviation industry, IATA's director general and chief executive Giovanni Bisignani said he expected to see more airlines go bust as sky-high oil prices slash profitability.
Mr Bisignani told the Australian National Aviation Press Club in Sydney: ‘We are in a perfect storm of uncontrollable fuel costs and falling demand. Airlines could lose as much as $6.1 billion this year. Already 25 airlines in our financial systems have gone bust - greater than immediately following 9/11 - and we are bracing for more. We are a fragile industry that is in a crisis.’
He said the reality was that oil prices seemed to be permanently higher than five years ago and were ‘re-shaping the business in a way that demand shocks of SARS (Severe Acute Respiratory Syndrome) or 9/11 did not.’
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