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Iata warns of bleak outlook for airlines

Dec 07 2011 13:15
James Brent-Styan
Geneva -  The global airline industry is struggling to make ends meet and the situation in the near future looks bleak, the International Air Transport Association (Iata) warned on Wednesday.

Iata has revised its forecast for industry profits for 2012 from $4.9bn to $3.5bn.

Tony Tyler, Iata's director general and CEO, said European and African carriers are by far the most challenged.

"The regions' carriers are expected to make a collective profit of just $1bn next year. African carriers are expected to make a loss of $100m, after breaking even in 2011.

"Economies and air transport markets continue to grow in the region, but load factors are not expected to be strong enough to offset the impact of weaker yields on profitability."

Iata chief economist Brian Pearce said high oil prices amid the global economic turmoil is a big cause for concern.

"Oil prices are 30% higher than this time last year. Normally we'd expect the oil price to fall in the current economic circumstances. This is not happening."

Tyler said the outlook is particularly "challenging".

"The rest of the world carriers may (report) weak profits. But if we see a banking crisis and a European recession and a further banking crisis, everyone will fall into the red.

"If Europe comes up with a solution to the eurozone crisis - and we should know in the next week or so if that will happen - we may see slight improvement. But there is pretty substantial downsize risk in the business at the moment."

Tyler said the numbers are staggering.

"Assuming we are correct in our 2012 prediction, the airline industry will have lost $26bn since 2001. Over the last 40 years airlines are in the black, but with a pitiable margin of 0.3%. This industry is all about turnover with very little left over."

Iata represents 240 airlines, which combined are responsible for 84% of global air travel.

iata  |  europe debt crisis  |  airlines  |  travel


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