Airline industry pro ts to plummet in 2012: IATA

BEIJING — Airline industry group IATA warned yesterday global pro ts would more than halve this year owing to surging oil prices and the euro zone 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 pro t of just $3.0 billion."

That compares with a pro t of $7.9 billion in 2011, IATA gures show.

Tyler cited the cost of oil as a reason for "anaemic global pro tability" 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.

Brent is currently sitting at $100 a barrel, although it is down more than $20 from multi-year peaks earlier this year.

But Tyler added: "The biggest and most immediate risk ... is the crisis in the euro zone. If it evolves into a banking crisis we could face a continent-wide recession, dragging the rest of the world and our pro ts down."

In a statement released as the AGM began yesterday, IATA said it had downgraded its outlook for European airlines in 2012, projecting loss- es of $1.1 billion compared with its previous forecast of $600 million in losses.

The estimate comes despite gures showing 5.6 per cent year on year growth in European passenger traf c in April and predictions global passenger numbers would rise to nearly 3 billion this year compared to 2.8 billion in 2011.

"For European carriers, the business environment is deteriorating rapidly, resulting in sizeable losses," Tyler was quoted as saying in the statement.

But he added that the global picture was "diverse", with carriers in North and Latin America expected to see improved prospects from 2011, compared with airlines in Europe, Asia-Paci c and the Middle East.

According to IATA estimates, North American carriers are likely to post pro ts 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 pro ts drop by more than half, as are those in the Asia Paci c region — due in part to slowing Indian and Chinese economies.

Growth in China, the world's second largest economy, slowed to 8.1 per cent in the rst quarter of 2012 — its slowest pace in nearly three years.

But yesterday, Li Jiaxiang — head of China's aviation watchdog — detailed ambitious expansion plans for his country's aviation pointing for instance planned construction new airports by 2015.

Li also reiterated that Chinese carriers would buy an average of more than 300 planes a year from 2011 to 2015 — the country's current ve-year economic plan.

During his speech, Tyler also blasted a controversial carbon tax that the European Union is trying to impose on all airlines — a move that has sparked a backlash from the United States, China, Russia, India and European carriers.

Airlines ying to, from or within the European Union are required to monitor CO2 emissions for entire journeys and, if necessary, pay for exceeding their carbon allowances. — AFP sector, to the of 70