Lufthansa Group will remove a total of 20,000 short-haul flights from its European summer schedule, Europe’s biggest airline said as the airline industry faces jet fuel shortages and soaring prices.
The cancellation of the 20,000 uneconomical short-haul flights through October would save the group about 40,000 metric tons of jet fuel, the price of which has doubled since the outbreak of the Iran conflict, Lufthansa said.
“For the flights scheduled in the summer timetable, the Group expects a largely stable fuel supply,” the airline said, adding that “Lufthansa is pursuing a range of measures to this end, including the physical procurement of jet fuel as well as price hedging.”
Lufthansa last week said it is accelerating plans to reduce its flight program and retire some aircraft earlier “In view of significantly increased kerosene prices, which have more than doubled compared to the period before the Iran war, as well as rising additional burdens from labor disputes.”
“The package for accelerated implementation of fleet and capacity measures is unavoidable in light of the sharply increased kerosene costs and geopolitical instability,” said Till Streichert, Chief Financial Officer of Lufthansa Group.
The war in Iran has cut most of Europe’s imports of jet fuel, while local output has been falling for nearly two decades due to dozens of refineries closing permanently or being converted to biofuel production.
The war in Iran and the closure of the Strait of Hormuz have severely constrained Europe’s jet fuel supply, while jet fuel prices have spiked to over $200 per barrel.
The last imports from the Middle East on tankers that had passed Hormuz before the war began have arrived, and there is only one alternative to source jet fuel—from the United States.
These supplies are not only insufficient to replace the loss of Middle Eastern jet fuel. Europe faces increasingly fierce competition from Asia for these cargoes as the crisis first hit Asia with crude supply from the Middle East collapsing, Asian refiners cutting refinery runs, and countries imposing fuel export restrictions to preserve domestic supply.
By Charles Kennedy for Oilprice.com
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