0

Sky-high fuel costs force cutbacks at airlines
Leading carriers, AirTran, Delta, feel the pinch

By Daniel Silliman

dsilliman@news-daily.com

Hartsfield-Jackson Atlanta International Airport's largest airlines are reporting cutbacks caused by high fuel prices.

While motorists have felt and complained about the cost of fuel for a while now, the airlines also are suffering the sharp rise of oil prices.

AirTran Airways reported a $13.5 million loss in the second financial quarter of 2008. Last year, at the same time, the Orlando-based airline, Atlanta's second largest, reported a $42.1 million profit. The difference between the second quarter of 2007 and the second quarter of 2008, according to AirTran, is the cost of fuel.

"As with many other airlines, this quarter's loss is primarily attributable to effects of record high fuel costs," according to the report released to stockholders. "The average price per gallon of fuel increased 70.5 percent to $3.75 in the second quarter, compared to $2.20 in the second quarter of 2007."

AirTran also reported financial successes, including a record investment balance, a credit card processing agreement and an advanced fuel hedging program, but the gains couldn't offset the burden of gas prices.

AirTran saw a $166 million increase in fuel costs.

Delta Airlines, at the same time, reported a $1 billion increase in annual fuel costs.

Delta's second quarter financial report -- posting a $137 million profit -- noted the sky-high fuel costs.

"When faced with the challenge of unprecedented fuel prices, Delta distinguished itself by reacting quickly and decisively," said Richard Anderson, Delta's chief executive officer, in the report.

"Decisive" action included increasing baggage handling costs and cutting some domestic flights. By the end of the year, the airline expects to end 100 flights, according to the report.

AirTran reported, this week, that it will reduce its Atlanta flights, dropping about 20 of the regular trips.

"Unprecedented fuel prices," said Edward Bastain, Delta's president and chief financial officer, "have created a real crisis in the airline industry."