Airlines eye bigger profits, warned to watch staff costs
BUSINESS RECORD STAFF Jan 19, 2016 | 4:43 pm
1 min read time
174 wordsAll Latest News, TransportationAirlines should watch staff cost even as they enjoy another year of higher profits based on the lowest oil prices since 2003, Reuters reported, citing analysts.
Mike Corley, head of Mercatus Energy Advisors, said at the Airline Economics conference in Dublin on Monday that he would not be surprised to see oil prices drop by another $5 to $10 a barrel. He said prices could rise again more quickly than people think.
Low prices are also prompting more airlines to look into their fuel hedging strategies, with some wanting to hedge and others scaling back existing programs, Corley said.
U.S. airlines are typically much less hedged than their European counterparts.
United Airlines used to hedge around 30 to 40 percent of its annual fuel needs, but that is now around 15 percent for the current year, said Ted North, United’s managing director of corporate finance.
However, low oil prices were not expected to result in airlines canceling orders for new fuel-efficient planes, developed when the oil price was high, said Peter Morris, chief economist at Ascend.
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