Northwest Airlines chief executive Doug Steenland called US$105 oil a "serious budget-breaker" and warned that high fuel costs are a "difficult financial challenge" for the carrier that emerged from bankruptcy just nine months ago.
Oil jumped above $108 a barrel on Monday to an inflation-adjusted record. Fuel is now the biggest expense at Northwest and most other airlines.
Steenland said if oil remains above $100 a barrel, it would cost Northwest $1.7 billion more this year than it planned for.
"If fuel remains where it is today, our increased fuel costs will again create a difficult financial challenge for the airline," he said. "This rapid increase in fuel costs is another reason why we continue to believe that consolidation in the industry is inevitable."
Steenland didn't mention Delta Air Lines, but the two carriers have held detailed talks about joining their operations.
High fuel prices were a major factor in Northwest's and Delta's bankruptcy filings in September 2005.
Northwest made $244 million in the quarter that ended September 30. But it lost $8 million in the next quarter. In January, Northwest said it hedged 15 percent of its first-quarter 2008 fuel, and 11 percent for the full year.
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