Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Search for Jobs

Index Last Change % Change
Dow 20,837.44 15.68 0.08%
Nasdaq 5,861.90 16.59 0.28%
S&P 500 2,369.75 2.41 0.10%
Treasuries 2.37 0.05 2.24%
Data as of 2:49am ET
Company Price Change % Change
Bank of America Corp... 24.57 0.34 1.40%
Chesapeake Energy Co... 5.62 -0.04 -0.71%
Ford Motor Co 12.66 0.19 1.52%
Frontier Communicati... 3.29 -0.08 -2.37%
Freeport-McMoRan Inc... 13.27 0.02 0.15%
Data as of Feb 27
Sponsors

Sections

Sterling Jewelers, the company that owns Kay Jewelers and Jared the Galleria of Jewelry, has been accused of fostering a culture of sexual harassment and discrimination against its female employees. More

Governors are split over reforming Obamacare and Medcaid. But there is one thing they agree on: They don't want their residents to be left uninsured. More

Prosecutors said they will indict Lee Jae-yong, the de facto chief of the giant South Korean conglomerate, on bribery and other charges. More

California is the hardest state for first-time homebuyers, according to a new report from Bankrate.com, while Iowa is the easiest state to put down roots. More