Global airlines could go bankrupt as cost of jet fuel soars during

Global airlines could go bankrupt as cost of jet fuel soars during

A billionaire Dubai-based jet tycoon is warning that global airlines could soon go bankrupt as the Iran warfare squashes journey demand and sends jet fuel costs hovering worldwide.

Avia Solutions Group Chairman Gediminas Ziemelis said he’s planning to shift a piece of his enterprise’ 145 jets from Europe to Asia and Brazil as the Middle East battle grounds flights and wipes out demand in Europe – just like the COVID pandemic.

“We need to be ready for any area, district, jurisdiction and geopolitical risk,” Ziemelis, 48, told Bloomberg. 

Gediminas Ziemelis, chairman of Avia Solutions Group, warned global airlines could go bankrupt. Bloomberg through Getty Images

“If it lasts more than one month, we may see potential first bankruptcies” of airlines round the world, he added.

Airlines in the Middle East – like Qatar Airways, Bahrain’s Gulf Air, United Arab Emirates-based flydubai and Air Arabia – are dealing with the worst challenges of the second as they’ve been pressured to cancel hundreds of flights and evacuate passengers, crews and planes.

Carriers round the world are also taking a success as Iran’s blockade of the key Strait of Hormuz pushes oil costs above $100 a barrel, and longer flight routes designed to skirt round parts of the Middle East drive planes to guzzle up more fuel than ordinary.

As of Wednesday, common jet fuel costs for Chicago, Houston, Los Angeles and New York had hit $4.56 per gallon, according to the Argus US Jet Fuel Index.

That’s already weighing on revenue margins, since jet fuel and labor are usually the two main prices for carriers – with some warning of huge losses if the battle rages on.

United Airlines CEO Scott Kirby not too long ago said in a be aware that his company would lose $11 billion if oil costs stay at current ranges – $6 billion more than the company made in its best yr ever – forcing it to hike airfares by 20%.

The airline has “the time and the luxury” to journey out larger fuel costs for now as clients continue to buy tickets at high volumes, however “it may be a challenge to continue passing through much of the increased fuel price if oil stays higher for longer,” Kirby said.

JetBlue this week hiked its checked bag charges to offest “rising operating costs.” NurPhoto through Getty Images

Like Ziemelis, Kirby in contrast the current airline disaster to the pandemic, saying, “If these other guys make the same mistakes they made six years ago, and if the forecast above $175 per barrel is right, you’ll see airlines not survive.”

In a speech Wednesday evening, President Trump said the US will exit Iran in two to 3 weeks – though he vowed to bomb the nation “extremely hard,” spooking buyers who’re fearful of a long-lasting vitality provide disruption.

Summer journey is about to be more costly as airlines have began charging a whole bunch more for tickets in the weeks since the US and Israel launched strikes on Iran on Feb. 28.

Earlier this week, JetBlue hiked its checked bag charges to offset “rising operating costs,” signaling that carriers could start passing alongside larger prices to flight add-ons, as nicely.

United Airlines CEO Scott Kirby warned his company would lose $11 billion if oil costs keep at current ranges. Luiz C. Ribeiro for NY Post

JetBlue didn’t specify the dimension of the worth hike, though its web site confirmed checked bag charges of $49 on home flights – up $4 from the last time it hiked baggage charges in 2024 alongside United Airlines, American Airlines and Alaska Air.

Southwest told The Post it doesn’t “have any immediate plans to increase fees due to macroeconomic factors.” Delta and United declined to remark, and American Airlines and Alaska Air didn’t reply to The Post’s inquiries.

Fares are larger virtually across the board, particularly on last-minute flights that are usually bought by enterprise vacationers, according to an analysis by Deutsche Bank.

The lowest costs for flights within 24 hours to Asia, Europe and past have hit $1,900 on common – an enormous improve from the $830-to-$1,000 vary that prevailed the day before the warfare began, according to Deutsche Bank.

Ziemelis, who’s price roughly $1.7 billion, according to Bloomberg, depends on a dangerous enterprise mannequin that entails renting Avia’s planes out for brief intervals to airlines that already have pilots, crews and upkeep help. He said he’s already seen demand drop.

But he’s still hopeful that his enterprise and others will be capable to climate the fuel shock.

“After COVID, all companies which survived made extraordinary profits. So sometimes crisis is opportunity,” he told Bloomberg.

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