• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Does Toyota Know Something That We Don’t?
  • 5 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 2 days World could get rid of Putin and Russia but nobody is bold enough
  • 22 hours America should go after China but it should be done in a wise way.
  • 5 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 4 days China is using Chinese Names of Cities on their Border with Russia.
  • 5 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 4 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 10 days huge-deposit-of-natural-hydrogen-gas-detected-deep-in-albanian-mine
  • 5 days Putin and Xi Bet on the Global South
  • 5 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 6 days United States LNG Exports Reach Third Place
  • 6 days Biden's $2 trillion Plan for Insfrastructure and Jobs

Soaring Fuel Costs Trigger Airline Warnings

Airlines are warning of a disappointing third quarter in the wake of higher fuel costs courtesy of rising crude oil prices.

Southwest Airlines said its August bookings were at the low end of what it expected, and cut its expectations for revenue per seat mile. United Airlines and Alaska Air Group issued warnings of their own, as higher fuel costs came thanks to tightening supplies. According to an SEC filing by United Airlines, the cost of jet fuel has risen more than 20% since mid-July, with Q3 fuel costs averaging between $2.95 and $3.05 per gallon. This compares to UAL’s cost of between $2.50 and $2.80 per gallon in July. 

The speedy rise in crude oil prices, and the subsequent jump in jet fuel, left little time for airlines to compensate for the higher costs by revising ticket prices.

Nevertheless, Bank of America analysts had already cut price targets for the airline industry in the day prior, citing rising jet fuel costs, so stocks, including United Airlines, rose on Wednesday despite the warnings that profits could disappoint courtesy of the higher prices. Southwest Airlines stock, however, was down 2.60% by mid-day.

Last month, International Air Transport Association (IATA) and S&P Global Commodity Insights data showed that global jet fuel prices averaged $119.82 per barrel for the week ending August 4—a 23% rise over the previous month’s figures. It also compared to an average $85.55 Brent price, for a crack spread of just over $34. Still, global air traffic at the end of the second quarter this year was 94.2% of levels pre-Covid.

Jet fuel is considered a middle distillate—a petroleum category that has seen its U.S. inventories hover 15% below the five-year average for this time of year.

By Julianne Geiger for Oilprice.com



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News