IATA is forcasting an industry loss of US$3 billion for 2006 ( http://www.iata.org/pressroom/pr/2006-06-05-01.htm
), slightly less than the $3.2 billion for 2005, but that overlooks the fact that US airlines will likely lose over $5 billion. European and Asian airlines are actually doing well despite the high fuel prices. African and Latam, not quite so well.
Hedging becomes very difficult for airlines in Chapter 11 - they don't have the upfront cash to buy the contracts, and nobody will lend them the money to do so either. Which means they are paying at the moment around $95 bbl for kerosene - the crack spread having increased from around $6 in 2001 to over $25 today. And anyway - is it a good bet to pay $95 for future fuel.
According to IATA "Labour productivity improved 33%. Sales and distribution costs dropped 10% and non-fuel unit costs reduced 13%," which should be returning some decent profits. Only if the geopolitical situation cools down and demand for fuel from India and China (and a few others) declines will we see lower fuel prices, but until then it will be tough times for all.