IATA: airline industry profits to slump

Airline industry group IATA warned on Monday global profits would more than halve this year owing to surging oil prices and the eurozone crisis, with European carriers suffering losses of $1.1 billion. Tony Tyler, head of the International Air Transport Association, also hit out at a controversial carbon tax scheme put in place by the European Union, lashing it as a "polarising obstacle to real progress". Tyler told the group's annual general meeting in Beijing that "2012 is another challenging year. We expect revenues of $631 billion but a profit of just $3.0 billion." That compares with a profit of $7.9 billion in 2011, IATA figures show. Tyler cited the cost of oil as a reason for "anaemic global profitability" and IATA said it predicted an overall average price of $110 a barrel this year using Brent crude oil as a basis, warning political risks could push this up. Tyler added: "The biggest and most immediate risk ... 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." In a statement released as the AGM began Monday, IATA said it had downgraded its outlook for European airlines in 2012, projecting losses of $1.1 billion compared with its previous forecast of $600 million in losses. According to IATA estimates, North American carriers are likely to post profits of $1.4 billion in 2012, a slight improvement on the previous year due to strict management of airline capacity. Carriers in the Middle East, however, are expected to see profits drop by more than half, as are those in the Asia Pacific region -- due in part to slowing Indian and Chinese economies.(QNA)