Oil prices may force airline consolidation


Northwest Airlines Corp. CEO Doug Steenland says high crude oil prices may further encourage consolidation in the airline industry, according to media reports.

MarketWatch reports that Steenland said the looming recession and the fast rise in oil prices make airline consolidation “inevitable,” according to a transcript released Tuesday.

eTN Chatroom: Discuss with readers from around the world:

Steenland told employees on Monday that $105 barrel oil is a “serious budget breaker,” according to MarketWatch, and that a $1 increase in fuel price is equal to $42 million in additional annual costs for the airline.

Crude futures were trading at more than $107 per barrel on the New York Mercantile Exchange midday Tuesday after getting close to $110 per barrel in morning trading.

Eagan, Minn.-based Northwest, which is the second-largest carrier at Milwaukee’s General Mitchell International Airport, is in merger talks with Atlanta-based Delta Air Lines.