FT: Airline industry hit by biggest crisis since pandemic

The airline industry is in the grip of its worst crisis since the pandemic, as the Middle East war has grounded flights, wiped more than $50 billion off the value of the world's biggest carriers and even raised the spectre of fuel shortages, Report informs via the Financial Times.

As the conflict headed into a fourth week, executives sounded the alarm on its repercussions for an industry exposed to a prolonged increase in oil prices, disruption to the Gulf's hub airports and a potential hit to global demand.

Passengers on routes far beyond the Gulf are set to face a steep increase in ticket prices in coming months as airlines attempt to shield their profits. Jet fuel, which accounts for a third of airlines' costs, has doubled since the US and Israel launched their attacks on Iran last month and is still rising.

Although many carriers are hedged against swings in oil prices, executives warned that the precipitous rise in the cost of jet fuel this month would force them to lift fares.

"Fuel spiked quite heavily after the Ukraine invasion in 2022 as well, but this has gone further north," said easyJet chief executive Kenton Jarvis, adding that the conflict marked the severest upheaval for the industry since the pandemic closed the skies in 2020.

In a sign of investors' alarm, the 20 largest publicly listed airlines have lost about $53 billion in market capitalisation since the war began, according to FT calculations.

Investors have also increased their bets on further declines in share prices, with Wizz Air, a low-cost European carrier, now the most shorted company on the FTSE 100, and easyJet also targeted.

The crisis has struck following a sustained rebound in demand since the pandemic, with several airlines enjoying a run of record profits. Nevertheless, executives are wary that demand can withstand much higher ticket prices.

The disruption has extended to cargo as freight from heavily disrupted global shipping shifts to aircraft, leaving some airports overwhelmed.