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Middle East carriers expected to post lower profits in 2012

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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.



 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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