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Bloomberg
US airlines counting on rejuvenated demand for spring and summer travel as the coronavirus wanes now face a new setback as Russia’s attack on Ukraine pushes jet fuel prices to multiyear highs.
Carriers could reveal reductions in planned flying as they update financial guidance at industry conferences in the coming weeks, Conor Cunningham, an MKM Partners analyst, said in a note. The blow may be softened as tightening supply makes it easier to boost fares, he said.
The Russian invasion of Ukraine has battered global oil markets, and fear of a supply shortage has pushed up prices. Fuel and labor are the largest costs for airlines, and spot jet fuel prices in New York harbour soared to $3.56 a gallon, up 30% this week to the highest level since 2008.
“The question now is which airline will blink first when it comes to capacity cuts,†Cunningham said. “Even if it is just a select few to slow capacity adds, we expect pricing to steadily improve on those actions†along with increased international and corporate travel in the first quarter.