US: Airlines are starting to worry about rising fuel costs

High fuel prices are becoming a big problem for airlines. Delta cut its full year earnings outlook Thursday, a day after American Airlines warned that its costs and sales would be lower than expected last quarter. The culprit: Delta's fuel cost $654m more in Q2 than a year ago, and American said the increase in its fuel costs would be about $50m more than it had expected. Higher oil prices lifted the average price of Delta's jet fuel by 39% during the spring. Prices are expected to continue to climb another 6% this quarter. To avoid a massive dent in earnings, airlines are all doing what they can to hold the line on spending on non-fuel items, including capital spending. Lower profits would also mean smaller profit sharing bonuses for employees. Strong demand for air travel is lifting fares, which has helped offset some fuel costs. Higher fuel prices can make fares more expensive because some airlines operate fewer flights when it costs more to fly them. <br/>