The spike in oil prices which has hit the global airline industry will not get any worse, according to the boss of Franco-Dutch aviation giant Air France-KLM.
Recent violence in Iraq has seen the price of a barrel of oil rocket during recent weeks, with Brent crude earlier this month going above $115 a barrel, its highest for nine months.
Brent was today trading at $112.60, still nearly $5 higher than it was less than a month ago.
Alexandre de Juniac, chairman and chief executive of Air France-KLM, has told the Evening Standard that the French-Dutch carrier does “not expect a significant increase”.
“We do not expect a catastrophe in the Middle East,” he said. “We do not expect something too harmful to the fuel price.”
De Juniac also played down fears that the oil price would stay at its current heights, saying that on the outlook “between $100 and $110 [for Brent crude] looks reasonable.”
With fuel a high proportion of airlines’ costs, shares in European carriers have been knocked by the soaring oil price despite heavy hedging of fuel in the sector.
Air France-KLM hedged around two-thirds of its fuel last year, but de Juniac still admitted the oil spike is “not good news” although, he added, “it’s news that we share with our competitors”.
Iraq is the second-largest producer and exporter of oil among the Opec countries. The industry is largely focused in the south of the country, away from the sectarian violence.
