Airline and travel industries see no immediate relief from Iran ceasefire

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By Yi-Chin Lee, Julie Zhu and Alessandro ParodiU.S. President Donald Trump's two-week ceasefire with Iran is unlikely to bring quick relief to the global aviation industry, executives said on Wednesday, even as airline shares surged on hopes the deal could ease the worst crisis airlines have faced in years.Industry officials warned that jet fuel supplies will remain tight and costly for months, even if Iran reopens the Strait of Hormuz, after damage to refining capacity across the Middle East."If it were to reopen and remain open, I think it will still take a period of months to get back to where supply needs to be given the disruption to the refining capacity in the Middle East," Willie Walsh, director general of the International Air Transport Association (IATA), warned.Delta Air Lines NYSE:DAL on Wednesday forecast lower-than-expected profit for the second quarter and said it would cut capacity to try to offset about $2 billion in extra fuel costs it expects to book during the period. The airline expects to pay roughly $4.30 a gallon for jet fuel in the June quarter, more than double last year's price.OIL PRICES DROP AFTER CEASEFIRE DEALFuel, typically airlines' second-largest cost after labour, accounts for about 27% of operating expenses. Jet fuel prices have more than doubled since the conflict erupted, far outpacing a roughly 50% rise in crude prices before the ceasefire.Iran's closure of the Strait of Hormuz choked global fuel supplies, forcing airlines to hike fares, cut flights, add refuelling stops and carry extra fuel. Some carriers have cancelled services to and from the Gulf - a key aviation hub linking Europe and Asia - citing safety concerns.Oil fell below $100 per barrel after said he had agreed to the two-week ceasefire with Iran, subject to the strait's immediate and safe reopening.But comments from executives and experts across the industry highlight deepening pain for airlines facing a doubling of jet fuel prices and worries about constrained supplies.European airlines are working with suppliers and airports to assess jet fuel stocks, lobbying group Airlines for Europe - whose members include Ryanair LSIN:0RYA, Lufthansa and British Airways-owner IAG - said, adding that it was “too early to tell” how quickly supply could recover.An EU coordination group on oil said after meeting on Wednesday that it saw no immediate risk to oil supply...

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