Bottom lines of airline companies the world over have been bleeding for the last many quarters. Just as world economic growth is slowing down and may lead to some decline in business travel, fuel prices are shooting though the roof. Crude oil prices look all set to cross $120 per barrel, something not many airline companies would have bargained for.

And predictably, there are only very few carriers who are generating cash surpluses to stay afloat. They include highly efficient legacy carriers with premium brands like Singapore Airlines or the large, established low-cost carriers like Southwest in the US or some of the European carriers.

The proportion of fuel costs in total costs have gone up substantially in recent years that successful hedging strategies have become as important as running a tight, efficient operation. In the US, the average fuel cost of low-cost carrier Southwest is less than $2 per gallon while for United Airlines it was over $3 per gallon. The substantial difference in fuel bill helped Southwest post nearly $35 million in first quarter profits while United lost over $500 million in the same period.

Delta, which is set to merge with Northwest, saw its fuel bill jump by 50 per cent and reported a loss of $6.4 billion for the quarter. As much as $6.1 billion was for a write-down of its goodwill, lowered because of high fuel costs. Northwest lost $4.1 billion, with $3.9 billion being provided for goodwill impairment.

Aircraft manufacturers on the other hand never had it so good. Boeing reported an impressive bottom line growth of nearly 40 per cent for the first quarter, even as the company is struggling to start production of the 787 Dreamliner. Boeing now has a total order backlog of $346 billion, including $271 billion for commercial aircrafts.

The demand for smaller private aircraft is also soaring and manufacturers have their order books full for many years. The decline in US economic growth seems to have had no impact on demand as demand from emerging economies and resource-rich countries have more than made up for it. General Dynamics, which manufactures the popular Gulfstream small jets, saw deliveries rise nearly 25 per cent during the first quarter and net income go up by over 30 per cent.

How long can this dichotomy between the fortunes of the manufacturers and customers continue? The airlines cannot survive like this for long, even if the industry goes through further consolidation. As demand slows down, there will be excess capacity and there is bound to be slowdown in aircraft orders.