British Airways chief warns 'airlines will go bust'

[marmar]

from the Guardian UK:



BA chief warns 'airlines will go bust'
Dan Milmo, transport correspondent
guardian.co.uk, Friday August 1 2008



More airlines will go bankrupt this year as rising fuel costs and weak consumer confidence ravage the industry, the chief executive of British Airways warned today.

Willie Walsh said carriers that struggled to make a profit during the recent sales boom will not survive the "worst ever" trading environment the industry has seen. The downturn has put 25 airlines out of business this year, including Luton-based business carrier Silverjet.

"You are going to see more airlines go bust. If you look around there are a lot of airlines out there that have not been profitable in the past few years. Those guys will not survive," he said.

Walsh added that fares will rise by an average of around 3% for the rest of the financial year, as BA passes on higher fuel costs to ever fewer passengers. Fares are expected to increase towards the end of the year as airlines' fuel hedges, where carriers buy their fuel in advance at a fixed cost that is often cheaper than the current market price, come to a close.

"As hedging unwinds within the industry, airlines are going to have to reflect the higher oil price. We will have to do something and it's not just BA that will have to adjust prices. The whole industry will have to. We are not reflecting the spot price today. What is reflected in our fares is the oil price net of hedging." Higher fuel surcharges are also an option, but BA has already increased those significantly this year. .......(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/aug/01/theairlineindustry.britishairwaysbusiness