Increased air travel was not enough to offset higher fuel costs and the effects of a recession at the nation's airlines, where losses climbed to a record $2 billion last year, industry officials say.
The red ink was more than double the industry's previous record loss and occurred even though a record 467 million passengers boarded U.S. airlines in 1990, a 3 percent increase over 1989, the Air Transport Association said in a year-end review."The airlines are hemorrhaging due to the combined impact of a recession and dramatically increased fuel costs," said Edward A. Merlis, vice president of the association, which represents most U.S. airlines.
The ATA said U.S. scheduled airlines had losses of $240 million in the first three quarters of 1990, then took a $1.7 billion loss in the final quarter of the year as jet fuel prices soared and the economy softened.
Merlis said that in August, when Iraq invaded Kuwait, the price of jet fuel was 63 cents a gallon. In October it was $1.39 a gallon, he said. Aviation Daily, an industry newsletter, reports that the average price of a gallon of jet fuel paid by a major airline has now fallen to 79 cents.
Merlis said the industry expects that losses in the six-month period including the last three months of 1990 and the first three months of 1991 will be nearly $2.5 billion.
He said that does not include fuel price hikes that may occur if war breaks out after Tuesday, the United Nations deadline for Iraq's withdrawal from Kuwait.
Some airlines have attempted to offset the rising cost of jet fuel though fare increases.