Airlines' 2011 profits down because of oil price

GENEVA: Global aviation earnings will likely decline to $3.5bn in 2012 but those could turn into steep losses exceeding $8.3bn if the eurozone crisis veers toward catastrophe, the industrys trade group said Wednesday.Associated Pressreported on Wednesday, that for 2011, the industry says it anticipates that surging oil and fuel prices will clip its profits at $6.9bn less than half of its $15.8bn in 2010 profits.The International Air Transport Associations annual review focused on Europes debt crisis that is threatening the global economy.The Geneva-based trade group called the gloomy economic outlook, particularly weak European demand and higher costs, challenging for aviation throughout the world, despite strong growth in Asia.For European airlines the only open question is how deep the losses will be next year, the associations chief executive Tony Tyler told reporters in Geneva.IATA, whose 240 member airlines carry 84 per cent of all passengers and cargo, says the industrys overall revenue in 2012 is expected to rise to $618bn from $596bn this year, while costs will go up from $583bn to $609bn.He said the projected 2012 operating profit of $8.7bn would result in a net profit of $3.5bn.But European carriers will likely post losses of $600m next year down from weak profits of $1bn this year as the regions debt crisis weighs on demand for travel, he said.According to IATA figures, if the eurozone crisis turns into a full-blown banking crisis with a deep European recession the airlines could be expected to result in losses for carriers in Europe of $4.4bn.Next would be North America, with $1.8bn in losses, and the Asian-Pacific, with $1.1bn in losses, the group says.The Middle East and Latin America could see $400m in losses, it says, and Africa might incur $200m in losses.Global air freight markets already are shrinking, down 5 per cent between May and October, and fuel prices are 30 per cent higher than they were a year ago, IATAs chief economist, Mr. Brian Pearce, said.International trade has pretty much ground to a halt, he said.
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