Fuel shock and aircraft shortages test airline recovery

Fuel shocks and aircraft shortages threaten the pace of the airline industry's recovery as executives convene in Rio de Janeiro. The IATA summit runs from June 6 to June 8 and comes amid soaring fuel costs linked to regional tensions and ongoing delivery delays from Boeing and Airbus, forcing many carriers to operate older, less efficient aircraft longer than planned. IATA had forecast a record $41 billion in industry net profit before the conflict intensified, but executives now expect that outlook to be revised lower. A Deloitte survey found fuel price volatility and inflation are among the top concerns for airline leaders. Azul plans to reduce flights to better match demand as fuel costs rise, while Air New Zealand cautioned that higher costs cannot be fully passed to passengers. Fuel and labor remain the two largest expenses for most carriers, with long-haul routes especially vulnerable to higher fuel burn. Data cited by Raymond James showed U.S. domestic fares remained strong in late May, underscoring continued pricing power for carriers even as costs climb.