American Airlines CEO: 'We're facing a fuel crisis'

American AirlinesAmerican and other airlines face the daunting task of dealing wtih rising energy costs. Click chart for more info on American. By Hibah Yousuf, staff reporter


DALLAS (CNNMoney) -- Just as major airlines have started getting their balance sheets back in order, they're bracing for the impact of skyrocketing oil prices.

"We're facing another fuel crisis, and crisis is not too strong of a word," said American Airlines CEO Gerard Arpey, speaking at a conference of business journalists in Dallas.

Last year, airlines had their best year in a decade, carving out a slim 2% profit margin. But oil prices have soared more than 20% in 2011, and that will increase jet fuel costs, which claim a large chunk of airline operating costs.

As violence in the Middle East and North Africa stokes fears that the political turmoil will spread to other oil producing countries, crude prices continue to climb. And that's adding upward pressure to fuel costs.

On Friday, crude oil prices settled at a fresh 2-1/2 year high of $112.79 a barrel.

Arpey said he's also concerned that higher energy prices will stall the economic recovery and decrease traffic as Americans pull back on overall spending, including travel budgets.

"We're all very worried about what's happening in the oil market," Arpey said. "If the economic recovery dampens, it won't be good for traffic."

The concerns come less than less than three years after the economy suffered its last fuel crisis.

In the summer of 2008, crude oil prices surged to nearly $150 a barrel.

As prices continue to creep higher, investors are getting nervous about the state of airlines' affairs. Shares of American parent AMR (AMR, Fortune 500) fell more than 5% Friday.

Other airlines were also under pressure. Shares of Delta (DAL, Fortune 500) slid 4%, JetBlue (JBLU)'s stock fell 5% and shares of UnitedContinental (UAL) were down nearly 7%. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 24,700.21 -287.26 -1.15%
Nasdaq 7,725.58 -21.44 -0.28%
S&P 500 2,762.59 -11.16 -0.40%
Treasuries 2.89 -0.03 -1.13%
Data as of 8:17pm ET
Company Price Change % Change
Advanced Micro Devic... 16.69 -0.42 -2.45%
AT&T Inc 32.39 0.20 0.62%
General Electric Co 12.95 -0.25 -1.89%
Bank of America Corp... 29.26 -0.14 -0.48%
Micron Technology In... 59.25 0.80 1.37%
Data as of 4:15pm ET
Sponsors

Sections

Wells Fargo's quest to clean up its act requires workers to shine a light on shady activity when they see it. More

While patents are intended to protect intellectual property, they're also seen in the tech industry as a way to boost the brands of companies and their employees. More

The state's booming industries will be looking for skilled workers and this online community college intends to retrain them. More