Iata pegs industry profit forecast

Iata pegs industry profit forecast

Iata has left this year's global airline profit forecast unchanged at $3 billion, or 0.5% of industry revenues.

But the stable outlook masks a widening gap between regions with only North and South America set to improve, as well as worries that cargo traffic might take a hit from the economic crisis spilling over from Europe.

Director general Tony Tyler told Iata's annual meeting in Beijing that business was improving for US carriers, many of which have been keeping capacity tight.

"The rest of the world is seeing reduced profitability. For European carriers, the business environment is deteriorating rapidly resulting in sizable losses," Tyler said. "The pessimism stems mainly from the worsening debt crisis in Europe," he added.

Iata almost doubled its forecast for European airline industry losses to $1.1 billion this year, from its previous forecast of a $600 million loss in March.

However, its forecast for North American industry profits improved to $1.4 billion from a previous estimate of $0.9 billion.

"While the forecast is built on the market's expectation that the sovereign debt crisis in the eurozone will intensify, the risk of more severe economic weakness in the event of a broader eurozone banking crisis could easily wipe out industry profits," Iata said in a statement.

On the positive side for airlines, traffic has been stronger than expected and the cost of fuel has fallen.


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