GENEVA (AP) — Global aviation earnings will likely decline to $3.5 billion in 2012 but those could turn into steep losses exceeding $8.3 billion if the eurozone crisis veers toward catastrophe, the industry’s trade group said Wednesday.
For 2011, the industry says it anticipates that surging oil and fuel prices will clip its profits at $6.9 billion — less than half of its $15.8 billion in 2010 profits.
The International Air Transport Association’s annual review focused on Europe’s 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 association’s chief executive Tony Tyler told reporters in Geneva.
IATA, whose 240 member airlines carry 84 percent of all passengers and cargo, says the industry’s overall revenue in 2012 is expected to rise to $618 billion from $596 billion this year, while costs will go up from $583 billion to $609 billion. He said the projected 2012 operating profit of $8.7 billion would result in a net profit of $3.5 billion.
But European carriers will likely post losses of $600 million next year down from weak profits of $1 billion this year as the region’s 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 $4.4 billion. Next would be North America, with $1.8 billion in losses, and the Asian-Pacific, with $1.1 billion in losses, the group says. The Middle East and Latin America could see $400 million in losses, it says, and Africa might incur $200 million in losses.
Global air freight markets already are shrinking, down 5 percent between May and October, and fuel prices are 30 percent higher than they were a year ago, said Brian Pearce, IATA’s chief economist.
“International trade has pretty much ground to a halt,” he said. “Freight is a very good signal for what’s going on in the economy. What it’s showing is that businesses have become very less confident.”
He said the industry’s overall financial outlook is based on expectations of European leaders “muddling through” to a solution, but if policy-makers get it wrong a full-blown banking crisis and European recession would have “some pretty serious consequences for the industry,” Pearce said.
“Our outlook is for the industry to come under further pressure whatever the economic scenario,” he added.
More Related Stories
- Here come the tornado truthers. Already
- Peace Corps to allow gay couples to volunteer together
- Moore officials: Funds for "safe rooms" were held up by red tape
- Rand Paul: Congress should apologize to Apple, not the other way around
- Rescue crews race to find tornado survivors
- Looting in Oklahoma?
- Hundreds of low-wage federally contracted workers strike in D.C.
- Okla. mother's tearful reunion with her 8-year-old son
- New campaign compares gun control to anti-LGBT discrimination
- Study: Salt Lake City is gay parenting capital of the U.S.
- Inhofe and Coburn: Red state hypocrites
- Teen activist to meet with Abercrombie CEO
- Watch: Family emerges from storm shelter after tornado
- Must-see morning clip: Barackalypse Now
- Okla. tornado survivor reunited with dog trapped in rubble live on camera
- Is Pope Francis an exorcist?
- Oklahoma death count confirmed at 24, 9 children
- Frantic parents search for children in tornado's wake
- Crews dig through rubble after deadly tornado
- 51 killed in massive Oklahoma tornado
- Don't cry climate-change wolf
Featured Slide Shows
The week in 10 picsclose X
- 1 of 11
Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
Credit: AP/LM Otero
Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
Credit: AP/Matt Rourke
A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
Credit: AP/Jenny Aicher
Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
Credit: AP/Molly Riley
Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
Credit: AP/J. Scott Applewhite
Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
Credit: AP/Carolyn Kaster
O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
Credit: AP/Las Vegas Review-Journal/Jeff Scheid
Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
Credit: AP/NASA/Chris Hadfield
When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
Credit: AP/Jacquelyn Martin
A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
Credit: AP/The Duluth News-Tribune/Clint Austin
Recent Slide Shows
- 1 of 11