European airline stocks tumbled as the price of oil rose to its highest in more than two years and British Airways, KLM, Emirates Airline and BMI canceled flights to Libya amid intensifying violence.
Futures for April delivery in New York rose as much as 9.8 percent and London-traded Brent surged to the highest since September 2008, as soldiers deserted Libyan leader Muammar Qaddafi’s government and diplomats resigned. Brent may trade as high as $110 a barrel in coming weeks if the unrest persists, according to Goldman Sachs Group Inc.
Willie Walsh, Chief Executive Officer of International Consolidated Airlines Group SA, said rising oil prices would “inevitably” translate into higher fares. British Airways, one of IAG’s two carriers, has raised its fuel surcharge twice since December.
“It’s difficult for the industry to cope with volatility on oil prices,” Walsh said at the ICBI Aircraft Finance and Commercial Aviation conference in Geneva on Tuesday. “It’s going to impact on ticket prices, no question, if oil prices continue to be at these levels.”
International Consolidated Airlines fell as much as 4 percent in London trading, and was down 1.9 percent at 235 pence as of 2:56 pm in London. Deutsche Lufthansa AG was down 2 percent in Frankfurt and Air France-KLM Group traded 3.2 percent lower in Paris.
Lufthansa, Europe’s second-largest carrier, said it is continuing daily flights from Frankfurt to Tripoli, though it’s prepared to react to developments. The German carrier is using a larger Airbus A340 wide-body jet for flights from the Libyan capital in order to get more passengers out of the country, spokesman Thomas Jachnow said by phone on Tuesday.
KLM, a unit of Air France-KLM, said it canceled flights to Libya scheduled for tomorrow and Thursday. Air France does not fly to Tripoli.
British Airways and BMI, a unit of Lufthansa, said they will review flight plans for Wednesday.
Delta Air Lines Inc and AMR Corp’s American Airlines do not fly to Libya.
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