Fuel suppliers demand airlines pay cash in advance

By Carl Mortished and Amanda Andrews – Times Online – May 26, 2008 …

Recession Warning Sign #283 … fuel suppliers cut off credit, demand airlines pay cash in advance … passengers who always had to pay in advance point, laugh “Ha ha” loudly …

Airlines are being forced to pay cash in advance for jet fuel as the major oil companies tighten the screws on an industry that is being crushed by an extraordinary surge in the price of crude oil.

Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia.

So uncertain is the cash solvency of the industry that jet fuel suppliers insist on prepayments into special bank accounts.

The need to put up money before delivery of fuel is a huge financial burden that has been shifted from the oil companies to the airlines.

According to John Armbrust, a US jet fuel consultant, the oil industry had $5 billion (£2.5 billion) of jet fuel credit outstanding to airlines before the 9/11 terrorist attacks.

Now they are demanding that airlines leave cash on deposit.

SouthWest Airlines is one of a few likely to still get credit