The International Air Transportation Association (IATA) has forecast further deterioration and damage to economic growth in its revised industry outlook 2012.
According to the IATA, this will be the second consecutive year of diminishing airline profit returns after a peak in 2010.
Global industry profits are forecast to remain at three billion dollars, unchanged since the March forecast and will yield a net profit of just 0.5 percent.
“The $3.0 billion industry profit forecast has not changed. But almost everything in the equation has. Demand has been better than expected, so far this year.
nd fuel prices are now lower than previously anticipated, but that’s on the expectation of economic weakness ahead.
“The Eurozone crisis is standing in the way of improved profitability and we continue to face the prospect of a net profit margin of just 0.5%,” IATA director general and chief Tony Tyler said.
The IATA noted a drop in oil prices but fuel continues to be a detrimental financial factor, accounting for one third of total airline operating costs.
Airline profits are expected to be generated in the Middle East, North America, Latin America and the Asia-Pacific, while losses are anticipated within Europe and Africa.
“There has been no let-up in the volatility of the economic environment. A few months ago, an oil price crisis was the biggest risk. Now all eyes are back on Europe. Markets are expecting the Eurozone sovereign debt crisis to intensify and economic damage to follow,” Mr Tyler said.
Source = e-Travel Blackboard: P.T