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Rising oil prices aviations biggest challenge
Friday, 23 March 2012
The International Air Transport Association (IATA) has announced a downgrade to its industry outlook for 2012 primarily due to rising oil prices. IATA expects airlines to turn a global profit of $3.0 billion in 2012 for a 0.5% margin. This $500 million downgrade from the December forecast is primarily driven by a rise in the expected average price of oil to $115 per barrel, up from the previously forecast $99.

“2012 continues to be a challenging year for airlines. The risk of a worsening Eurozone crisis has been replaced by an equally toxic risk—rising oil prices. Already the damage is being felt with a downgrade in industry profits to $3.0 billion,’’ said Tony Tyler, IATA’s Director General and CEO .

IATA revised upwards its estimated profits for 2011 to $7.9 billion from the previously forecast $6.9 billion. This was primarily owing to the much better than expected performance of Chinese carriers.

African carriers are still expected to see losses of $100 million, unchanged from the previous forecast. Some of the region’s economies are growing strongly and generating expanding demand for air transport. However, passenger and freight load factors are very low on average for airlines in this region which will make it difficult to recover the rise in fuel costs.


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