The chief executives of Delta Air Lines (DL) and Northwest Airlines (NWA), whose airlines are also prospective candidates for a merger, have warned that rising oil prices are severely impacting carriers and threatening industry's recent return to profitability.
Speaking at the FAA Aviation Forecast Conference in Washington, Delta CEO Richard Anderson said high fuel costs are the "first and foremost issue" for the airline industry, and that $105-plus per-barrel crude oil prices were "really having a debilitating, negative effect."
NWA president and CEO Doug Steenland told employees that fuel costs are a "budget breaker" that could add as much as $1.7 billion to the carrier's 2008 costs. He added, "This rapid increase in fuel costs is another reason why we continue to believe that consolidation in the industry is inevitable."
Both CEOs, however, declined to comment on DL-NWA merger speculation.
Anderson also criticized the lack of a comprehensive national energy policy. "In the short run, a lot of what's going on in the fuel business is market speculation, and there's not a whole lot you can do about that. But the issue's been around a long time and there are a lot of sources of demand like home heating that have alternatives [to oil-based fuel]. We really don't have any conservation policies. . .We're several years behind time in dealing with this issue. We can't as a country, that's so oil dependent, just tell OPEC to increase production."