Petrobras to hike jet fuel price 55% in blow to airlines

Brazil’s state-run oil firm Petrobras is set to increase jet fuel prices by a staggering 55% on April 1, a move that will deal a heavy blow to the nation’s airlines and likely lead to higher ticket prices for travelers. The price hike reflects the recent surge in global energy costs, with Brent crude trading above $90 a barrel.

"Abra Group, the holding company that controls airline Gol, said on Tuesday that Brazilian state-run oil firm Petrobras will raise jet fuel prices by about 55% starting April 1," the company disclosed in a statement.

The sharp increase will place immediate pressure on the operating costs of Brazil's major carriers, including Gol Linhas Aéreas Inteligentes SA and the Brazilian operations of LATAM Airlines Group. Fuel is the single largest expense for airlines, and a more than 50% jump in this key input will severely compress profit margins that are already thin. The move comes as global oil prices have climbed on geopolitical tensions and tightening supply.

For Brazil’s airline industry, the price shock jeopardizes the post-pandemic recovery and could lead to reduced flight schedules if costs can't be passed on to consumers. The increase also highlights the vulnerability of the sector to volatile energy markets and will likely trigger a negative reaction in the stock prices of listed airlines.

This article is for informational purposes only and does not constitute investment advice.