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JEREMY HOBSON: This morning Delta Airlines kicked off a string of airline earnings with a profit of $19 million in the fourth quarter. $19 million isn’t all that much for a company of Delta’s size.
But, for the airlines, any profit is good news as Marketplace’s Nancy Marshall Genzer reports.
NANCY MARSHALL GENZER: Aviation analysts expect all the airlines to book a combined profit of $400 million for the fourth quarter of last year. That reverses a loss of $800 million the previous year. What’s up with the airlines? Airline analyst Darryl Jenkins says they’re following the economy.
DARRYL JENKINS: A robust economy is an airline’s best friend — it always has been and it always will be. It’s what makes airline traffic improve.
But there are clouds on the horizon. The price of jet fuel is on the rise. Oil prices climbed back over $90 a barrel last month. Jenkins says it’ll be hard for the airlines to make a profit if oil gets up to $105 per barrel. One way the airlines deal with the risk is by hedging — locking in their jet fuel at a certain price. Southwest Airlines did that, and made out very well at first. But it ended up losing money when oil prices fell. Jenkins says everybody’s too paranoid to do much hedging now, because they don’t know which way oil prices are headed.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
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