Jet Fuel Price Surge is Clouding U.S. Airlines’ Recovery Plans
(Bloomberg) -- Jet fuel prices are surging above pre-pandemic levels, an ominous headwind for airlines plotting a recovery from more than a year of losses. Despite lackluster demand, the cost of jet fuel has climbed about 70% so far this year alongside rising crude oil prices.
United Airlines Holdings Inc. on Tuesday forecast an average price of $2.39 a gallon in the fourth quarter, up from $2.14 in the most recent quarter. The airline paid $2.02 per gallon in the third quarter of 2019.
The carrier’s chief executive officer, Scott Kirby, expressed confidence in a statement that his company will be able to keep costs in check as it looks to rebound. But United didn’t provide earnings guidance for the current quarter or full year.
Rival Delta Air Lines Inc. last week warned that rising fuel costs threaten its fourth-quarter earnings. The Atlanta-based carrier is forecasting a price of $2.25 to $2.40 a gallon for the fourth quarter, compared with $1.94 in the third quarter of 2019.
Each 5-cent increase in fuel represents $40 million of expense, Delta Chief Financial Officer Dan Janki told investors Oct. 13. But that may not be immediately reflected in higher retail airfares. Delta said there is typically a pricing lag of four to six months.
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