Higher oil prices hamper fuel-dependent businesses
Tuesday, March 22, 2011; 3:07 PM
NEW YORK -- Airlines, cruise ship companies and other businesses that buy a lot of fuel say the sharp rise in oil prices will be a major drag on revenue this year. Here's a look at how some are responding.
-Airlines: Delta Air Lines President Ed Bastian said Tuesday that fuel costs will rise by about $600 million in March alone. The nation's No. 2 airline hasn't been able to raise fares fast enough to keep up with the surge in jet fuel, which will cost between $3.13 and $3.18 per gallon in the second half of the year. Bastian said Delta plans to deal with higher fuel costs by cutting flights and taking older, gas-guzzling planes out of its fleet.
-Cruise lines: Cruise ship operator Carnival Corp. cut its earnings forecast for this year from previous estimates it made in December, in part because of higher fuel costs. Vice Chairman and Chief Operating Officer Howard Frank said fuel prices hurt the company's revised 2011 outlook by 45 cents per share.
-Drivers: Americans are buying less fuel than they did last year, according to a MasterCard SpendingPulse report. The SpendingPulse report said that gasoline consumption fell 1 percent last week and has dropped on a year-over-year basis for the third straight week. Motorists are pulling back as pump prices follow oil sharply higher. Retail gasoline prices increased 37.9 cents per gallon in the past month, forcing U.S. motorists to spend roughly $143 million more per day at the pump, according to the Oil Price Information Service.