Airlines trade group predicts global profits to shrink in 2012

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A trade group for the world’s airlines fears surging fuel prices and the ongoing Eurozone crisis could cut into the industry’s rebounding profit margin.

In a report filed Wednesday, the International Air Transport Assn. maintained its previous prediction that the world’s airline industry would collect $6.9 billion in profits this year, or a margin of 1.2%. But the group lowered its profit forecast for 2012 from $4.9 billion to $3.5 billion, or a margin of 0.6%.

And if the Eurozone crisis evolves into a banking crisis and another steep recession, the association predicts the airline industry could lose up to $8 billion next year.

“The biggest risk facing airline profitability over the next year is the economic turmoil that would result from a failure of governments to resolve the Eurozone sovereign debt crisis,” said Tony Tyler, the association’s director general and chief executive.

But the group reported good news for airlines in North America, which are expected to finish 2011 with $2 billion in profits, up from a previous forecast of $1.5 billion, thanks in part to increased travel demand. Airlines have also kept profits high by packing more passengers per plane.

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— Hugo Martin