p17 pink nov14 11/11/08 17:38 Page 17
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OIL PREDICTIONS.
Airlines tipped for $5bn
As airlines report
huge slumps in
profits due to profits in 2009 if oil falls
record fuel
prices, Tricia AN AIRLINE analyst has predicted good news for economic activity and, therefore, oil demand,
Holly-Davis
airlines next year, and forecast that total profits exerting downward pressure on prices”.
assesses what
could exceed $5bn. The forecast represents “a major upward
the experts say
Michael Derchin, from FTN Midwest Securities, adjustment” from last year’s outlook, according
said airline stocks would soar in 2009, as oil to the executive summary of its World Energy
the future holds prices continued to decline. Outlook 2008 that was provided last week to
for the cost of oil
Speaking to the Fort Worth Star Telegram, he MarketWatch, an online news service.
said airlines could reap profits exceeding $5bn, “Prices are likely to remain highly volatile,
based on oil averaging $80 per barrel and unit especially in the next year or two,” the IEA said.
revenues growing 8-9%, in line with the same As TTG went to press this week, the price for
percentage reduction in airline capacity. a barrel of oil had slipped just below the $60
However, the International Energy Agency mark, less than half its summer high of $150.
has forecast crude oil is likely to average $100 a Derchin’s predictions came on the heels of
barrel in the period between 2008 and 2015, and profit slumps across the aviation sector, which
rise to more than $120 in 2030. blamed high fuel prices for the poor results.
TRAFFIC SLOWDOWN.
It did, however, add that a “worsening of the
British Airways
current financial crisis would most likely depress ■ Aviation news, p28
profits dive 92%
Oil prices: Where to next?
BRITISH Airways’ half-year profits plunged 92%
$147
IEA projection
$140
as a massive hike in fuel costs eroded a rise in
$130
Analyst projection
revenue driven by higher ticket prices.
$120
The carrier made a pre-tax profit of £52m for
the six-month period ending September, down
$100
$/BBL
from £616m for the first half of 2007. Revenue
$80
was up 6.4% at £4.75bn, despite a slowdown in
$97
$59
long-haul premium traffic since the summer.
$60
Yields were up 10.5% as a result of both price
increases and the impact of a stronger US dollar.
Jun 2008 Jul Aug Sep Oct Nov Dec Jan 2009
Fuel costs for the period were up £511m
NYMEX Crude Oil
at £1.4bn. The carrier’s annual fuel bill is still
expected to be up some 50% at about £3bn.
MIDDLE EAST.
Employee costs, including a £40m severance
provision, were up 8.6%. Emirates profits slump by 88%
BA chief executive Willie Walsh said BA was
continuing to review capacity plans across the EMIRATES Airline has reported a net profit of the first six months of the financial year, up from
network, with plans to axe capacity by 1% in the $77m for the first six months of its financial year an average of $67 for the same period in 2007.
2009 summer schedule. ending September 30, a decline of 88%. Overall, Emirates’ fuel costs were $469m
This would include the suspension of four The half-year figure compared with the $643m higher than budgeted.
services, comprising Heathrow services to Dhaka profit it achieved for the same period in 2007. The drop in profits reflected a 40% increase
and Kolkata, and Gatwick short-haul services to The airline blamed record high oil prices, in costs, with fuel spend more than doubling
Dublin and Zurich. which peaked at nearly $150 per barrel in July, from last year’s $1.1bn to $2.5bn.
Walsh added: “The six-month period will be for the dip in profits. Sheikh Ahmed bin Saeed Al-Maktoum,
remembered as one of the bleakest on record. Operating revenue for the first half of the year Emirates chairman and chief executive, said:
“The period was hit by a crisis in the banking rose by 31% to $6bn. Passenger traffic was up “The first half of the year was tough for the
sector, record fuel prices and several airlines 11%, while passenger yield increased by 20%. airline industry, with record fuel prices forcing
going out of business.” Crude oil prices averaged $122 per barrel for many carriers to shut shop or consolidate.”
14.11.2008 17
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