The price of fuel is just one demon Delta, which posted a $1.1 billion loss in the first quarter, must fight to remain out of bankruptcy court.
The impact of rising fuel prices on our industry became even more intense this week as fuel reached record trading prices above $60 a barrel. Jet fuel prices have now climbed to levels nearly 60 percent higher than last year, exceeding any market-predicted expectations. The added cost of refining crude oil to jet fuel remains at unusually high levels, further increasing costs to airlines. And most of the industry’s long-term hedges expire this year, exposing every airline to an increasingly difficult environment.
"While these challenges are not unique to Delta, it is important to remember that based on our expected fuel consumption for 2005, every one penny increase in the average annual cost per gallon drives approximately $25 million in additional fuel expense per year.
Fuel saving measures @ Delta:
(1) Improved flight routing = could save up to $30 million annually.
(2) Increased crew-led conservation
(3) Operation Clockwork
(4) Reduced aircraft weights = would save 2.5 million gallons of fuel each year.
(5) Improved payload planning = Fuelers and payload planners are more accurately matching the amount of fuel required on each flight by using actual payload weights for fuel calculations rather than payload estimates.
(6) Optimal fuel planning = Flight Operations and Flight Control have worked together to reduce the amount of fuel remaining on a flight’s arrival to the gate by about 150 gallons per flight, resulting in less overall fuel burn en route.
(7) Reduced APU usage = generated $1 million in annual fuel and maintenance savings just at Delta North (Atlanta).
"In May, we reinstituted a short-term ‘physical hedging’ program that locked in approximately 10 percent of our June fuel purchasing requirement at lower rates. And we continue to move ahead with fleet simplification by removing older and less fuel efficient 737 and 767 aircraft from our fleet this year.
(Atlanta BizJournals)
