Airline industry to lose $2.3B

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A new look at the global airline industry paints a bleak picture amid record oil prices.

The airline industry will lose $2.3 billion this year because of oil price increases, according to the International Air Transport Association.

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The loss forecast by IATA, which represents more than 240 airlines around the world, contrasts with a projected profit of $4.5 billion announced in March. This marks the second time IATA has lowered its forecast this year.

The most recent forecast uses a consensus oil price of $106.50 per barrel of crude, up from the $86 per barrel used in the March forecast, IATA said. It’s possible the forecast could be adjusted again, as oil is more than $126 a barrel now.

It’s estimated that for every dollar the price of fuel increases, airline costs go up by $1.6 billion.

The total fuel cost for the airline industry this year is expected to be $176 billion — 34 percent of total operating cost, IATA said. This is a $40 billion increase from the 2006 bill.

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