Mon, Jun 07, 2004 - Page 10 News List

Oil prices high on airlines' agenda

AFP , SINGAPORE

Airlines' strategies to cope with soaring fuel prices are on the agenda at the International Air Transport Association's annual general meeting in Singapore starting today.

The association's leader, Gio-vanni Bisignani, said last week that one of the key issues of the two-day meeting would be how to streamline the industry. The oil-price increases are the latest challenge to face airlines worldwide, following the attacks on New York's World Trade Center, the Iraq invasion and occupation, and last year's SARS outbreak.

"The past three years tested the mettle of our industry as never before," Bisignani said when he arrived in Singapore.

"With record-high fuel prices challenging our profitability, it is time to put our efforts toward rebuilding the industry. At this [meeting], we need to achieve consensus on a stronger, more streamlined and lower-cost industry structure. And we need to convince our industry stakeholders of the need for change."

Bisignani expressed confidence that the airlines would be able to ride out this latest challenge.

"Overall, I am very optimistic," Bisignani said.

"If this [oil price increase] ends by summertime, I think the situation will evolve in a more positive way, but these four [or] five months would have affected the balance sheets of the airlines," he said.

Crude prices eased from record highs last week after OPEC pledged to boost production quotas by 2.5 million barrels per day, slightly easing investors' fears of oil supply disruptions from the Middle East.

But New York's reference light sweet crude for July was still at US$38.49 a barrel on Friday, about 30 percent higher than last year's average price.

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