The International Air Transport Association (IATA) has cut industry 2011 profit 2011 forecast to US$8.6 billion from last's year's $16 billion because of high oil prices, according to the Shipping Gazette.
The report quoted IATA’s director general Giovanni Bisignani saying high oil price risks stalling the global economy’s growth.
IATA raised its average oil price forecast to $96 per barrel, up from $84 in December, factoring in the impact of fuel hedging which is roughly 50% of expected consumption.
"This year the industry is performing a balancing act on a very thin tight-rope of a 1.4 %. It is a structural problem that the industry has faced with an average margin of just 0.1% over the last four decades," Bisignani was quoted saying.
Oil prices could still damage the industry despite global GDP forecast increase of 3.1% and demand in both passenger and cargo sectors, up 5.6% and 6.1% respectively. Cargo yields are up by 1.9% from previous forecast of zero growth.
Regional winners continue to be Asia-Pacific at $3.7 billion collective profit although much reduced from the previous year's $7.6 billion through its exposure to low hedging on fuel price. Inflation fighting measures in China are also slowing trade and air cargo demand.
Middle East carriers are expected to return a profit of $700 million, much better than the $400 million previously forecast, but down from the $1.1 billion profit that the region posted in 2010. -- Source: Shipping Gazette