Fact Sheet - Fuel

• Provisional estimates indicate that the global airline industry’s fuel bill grew by US$25 billion to US$136 billion in 2007 (accounting for 29% of operating expenses at US$73/barrel Brent of oil).
• This is an increase of more than 300% on 2003’s fuel bill of US$44 billion (that accounted for 14% of operating expenses at US$28/barrel Brent).
• In spite of this large increase, higher revenues and efficiency improvements will help the industry post a net profit in 2007 for the first time since 2000.
• In 2008 the fuel bill is forecast to grow to US$176 billion (accounting for 34% of operating expenses at US$106.5 per barrel Brent) due to:
  • Traffic growth
  • Increase in oil price and the renewal of fuel hedging contracts at higher prices
  • An increase in refinery margins of $31 billion (compared to 2003 level)
  • Offset, in part, by further efficiency gains in fuel use made by airlines
• Industry losses of US$2.3 billion (under consensus view of oil price) and US$6.1 billion (under futures market view of oil price) are forecast for 2008.
  
  

Industry Fuel Costs and Net Profits

Fuel Impact on Operating Costs

Year	% of Operating Costs	Average Price per Barrel of Crude	Break-even Price per Barrel	Total fuel cost
2003	14%	US$28.8	US$23.2	US$44 billion
2004	16%	US$38.3	US$34.5	US$61 billion
2005	22%	US$54.5	US$51.8	US$90 billion
2006	26%	US$65.1	US$64.8	US$111 billion
2007	29%	US$73	US$76.5	US$136 billion
2008 F consensus view on oil	34%	US$106.5	US$105.1	US$176 billion
2008 F futures market view on oil	36%	US$122.0	US$118.2	US$189 billion

Updated: 6 /2008  Next Update: 9/2008 Source: Industry Financial Forecast Table (IATA Economics)

Impact of Refinery Margin on Fuel Costs

Note: Chart shows 2008 forecast loss based on consensus view of oil price this year
Updated: 6/2008  Next Update: 9/2008 Source: Industry Financial Forecast Table (IATA Economics)

Updated: July 2008