Europe’s politicians are being warned that if they don’t resolve the region’s debt crisis Airlines worldwide will suffer massive losses next year.
IATA, the industry’s leading trade group, said the euro must be shored up to prevent a new shock to the global banking system that would impact air transport across the globe.
The International Air Transport Association fears an six billion euro hit.
“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 euro zone sovereign debt crisis,” said Tony Tyler, IATA’s Director General.
Even in the best-case scenario, Europe’s airlines face losses in 2012 and the gap between the industry’s haves and have-nots is expected to widen as Asian carriers soak up new demand and North American airlines sell fewer seats.
IATA, which represents 240 of the best-known airlines carrying 84 percent of global traffic, cut its central forecast for 2012 industry profits to $3.5 billion (2.6 billion euros) from $4.9 billion (3.6 billion euros).
Its 2011 profit outlook was unchanged at $6.9 billion (5.2 billion euros).