European airlines headed for huge annual losses

Airlines in Europe look certain to post huge losses again in the current year, the International Transport Association (IATA) has warned. It cites the eurozone debt crisis as the main reason for the bleak outlook. Global profits for airlines will more than halve over the course of 2012, the International Air Transport Association (IATA) predicted at its annual meeting in Beijing on Monday. It said European carriers would be hardest hit by the unfavorable business climate and looked set to post losses to the tune of $1.1 billion (870 million euros). The IATA's executive director, Tony Tyler, cited the soaring cost of oil as one of the main reasons for "anemic global profitability," adding that the industry group expected an average price of $110 a barrel this year. But the oil price is far from being the only worry. "The biggest and most immediate risk is the crisis in the eurozone," Tyler said. "If it evolves into [an even stronger] banking crisis we could face a continent-wide recession, dragging the rest of the world and our profits down." Taxation controversy The gloomy outlook for European carriers came despite figures showing 5.6-percent year-on-year growth in passenger traffic on the continent in April 2012 and predictions that global passenger numbers would rise to nearly three billion this year, up from 2.8 billion in 2011. The IATA lashed out against a controversial carbon tax scheme the European Union put into place to help achieve its goal of cutting emissions by 20 percent by 2020. It called the scheme "a polarizing obstacle to real progress." IATA officials said that the prospects for airlines this year presented a very diverse picture. While carriers in Europe, the Middle East and the Asia Pacific region were all expecting hefty losses this year, those in North and Latin America could see slightly improved results year-on-year.