Middle East carriers expected to post lower profits in 2012


Middle East carriers are expected to post a $300 million profit, less than half the previously forecast $700 million profit, as long-haul market conditions deteriorate, in particular those linked to the weak European economies.

Africa 4 The International Air Transport Association (IATA) maintained its previous profit forecast for global airline industry in 2011 but predicted a even bleaker year in 2012, according to a revised IATA outlook published on Wednesday.

The industry’s profit was still expected to be 6.9 billion U.S. dollars as the association forecast in September, representing a net margin of 1.2 percent, IATA Director General and CEO Tony Tyler said at a press conference.

But there would be wider differences among different regions compared with the previous forecast, Tyler said.

Among the three biggest markets, European carriers were expected to generate a collective profit of just 1.0 billion dollars, down from the previously forecast of 1.4 billion, due to higher passenger taxes and weak domestic economies.

North American region would post a profit of 2.0 billion dollars, up from the previous forecast of 1.5 billion, as a result of faster growing economy and tight capacity management.

Profitability of Asia-Pacific region was upgraded from 800 million dollars to 3.3 billion, the biggest absolute profit in all the regions, largely as a result of China’s expanding domestic market.

Looking ahead to 2012, IATA downgraded its previous profit forecast from 4.9 billion dollars to 3.5 billion, representing a net margin of 0.6 percent.

“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. Such an outcome could lead to losses of over 8 billion–the largest since the 2008 financial crisis,” said Tyler.


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