World’s airlines are poles apart as turbulence hits the Eurozone

Marion Dakers
AIRLINES around the world are braced for the Eurozone’s turmoil to threaten profits and even claim the scalp of some firms.

The International Air Transport Association (IATA) left this year’s global airline profit forecast unchanged at $3bn (£1.93bn), or 0.5 per cent of industry revenues.

But this stable outlook fails to show the widening gulf between relatively prosperous regions such as South America and the struggling European carriers.

IATA almost doubled its forecast for European airline industry losses in 2012 to $1.1bn, from its previous forecast of a $600m loss released in March.

But it gave a hefty boost to its forecast for North American industry profits, to $1.4bn from a previous estimate of $900m.

“We see the market as being quite polarised,” said KPMG transport advisory partner James Stamp.

“Airlines that will struggle are likely to be the smaller airlines lacking scale and network benefits.”

Regional airline Flybe yesterday beat lowered forecasts for its full year results, posting an underlying pre-tax loss of £7.1m.

It called the performance, which was hit by a five per cent decline in its core UK market and £3.7m of losses at its Flybe Europe division, “disappointing”, even as revenues rose 3.3 per cent.