Airlines halve full-year profit forecasts
Global turmoil and rising oil prices damage leading carriers
By CFOWorld.co.uk | CFO UK | Published 14:20, 06 June 11
The world’s leading airlines halved their profit forecast for the full year with high oil prices and turmoil in various parts of the world cited as leading factors hindering the industry’s performance.
Japan’s recent natural disasters, political unrest in the Middle East and North Africa and oil prices above $100 a barrel helped damage the prospects of groups represented by the International Air Transport Association (IATA), the organisation said on Monday.
The views of most global carriers are reflected by the IATA, with the latest profit forecasts for the industry put at $4 billion for the year, down from $8.6 billion just over three months ago.
“The efficiency gains of the last decade and the strengthening global economic environment are balancing the high price of fuel,” the IATA’s director general, Giovanni Bisignani, told the group’s annual general meeting in Singapore.
“But with a dismal 0.7 percent margin, there is little buffer left against further shocks.”
Another concern for the association is that of a potential trade war if European regulators move ahead with plans oblige airlines to join a carbon emissions trading scheme.
Airlines say the scheme, designed to tackle growing emissions from the aviation industry, will only increase costs and add to pressures already caused by the sluggish global economy.
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