Lower oil prices still too high for most airlines

Although oil prices have fallen back quite noticeably from their previous record-breaking levels earlier this month, airlines still appear to be struggling to remain profitable. For some major carriers, however, it is even a major challenge just to break even these days. Profits at Air France-KLM, for example, have fallen back by a stunning 59 percent in the first quarter. While Franco-Dutch company-which happens to be Europe’s largest airline, has succeeded in remaining profitable during these difficult times, Iberia has been much less fortunate. The Spanish national airline went public, noting that it has thus far generated a loss of $6.5 million. British Airways, another power house in Europe, has also had a rough ride and noted a staggering 88 percent fall in profits. While British Airways has managed to remain profitable thus far, it may end up just breaking even by the end of the year.

Air France-KLM and British Airways are some of Europe’s strongest airlines, yet even they are finding it exceedingly difficult to manage with higher than usual oil prices. This, however, underlines how difficult it is for medium and small-sized airlines to remain profitable and goes a long way in explaining why companies like Austrian Airlines and Alitalia are in the red. But the fact that oil prices are falling, yet carriers are still finding it difficult to manage, indicates that the current economic slump and worries about a full blown recession are weighing heavily on the entire industry.

www.airfrance.com