Airline industry profits expected to plummet in 2012: IATA

BEIJING, China (UPDATED) – Airline industry group IATA on Monday, June 11, forecast global profits would plummet by more than half in 2012 due to high oil prices and the ongoing eurozone crisis.

“2012 is another challenging year. We expect revenues of $631 billion but a profit of just $3.0 billion,” IATA head Tony Tyler told the group’s annual general meeting in Beijing — according to a copy of his speech — confirming a previous forecast made in March.

This compares with a 2011 profit of $7.9 billion, International Air Transport Association figures show.

Tyler cited high oil prices as one of the main reasons for “anaemic global profitability” — with the industry group expecting an average of $110 a barrel for the year — and warned volatile political situations could push up prices.

“The biggest and most immediate risk, however, is the crisis in the eurozone. If it evolves into a banking crisis we could face a continent-wide recession, dragging the rest of the world and our profits down,” he said.

In a statement released as the AGM began Monday, IATA also downgraded its outlook for European airlines in 2012, projecting losses of $1.1 billion compared with its previous forecast of $600 million losses.

“For European carriers, the business environment is deteriorating rapidly, resulting in sizable losses,” Tyler was quoted as saying in the statement.

But he added that the global picture was “diverse”, with carriers in North and Latin America seeing improved prospects, compared with the negative picture for airlines in Europe, Asia-Pacific and the Middle East. – Agence France-Presse