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Airline profit forecast cut as Ukraine crisis pushes up fuel costs

Airline profit forecast cut as Ukraine crisis pushes up fuel costs
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Global airlines are likely to make less profit this year than previously hoped, the International Air Transport Association has warned.

IATA said the industry’s total profit is expected to be $18.7 billion (13.46 billion euros). Back in December it was predicting $1 billion (720 million euros) more than that.

Still it is a big improvement on last year’s $12.9 billion (9.28 billion euros) profit, helped by growing cargo revenue.

IATA, which represents about 200 airlines, said the biggest hit will come from the crisis in Ukraine which is causing geopolitical tensions and driving up oil prices which will boost airline’s fuel bills.

Latin problems

Economic weakness in Argentina and Brazil is also clouding profits. Latin American airlines are expected to post a profit of $1 billion (720 million euros) this year, a third less than previously projected.

IATA, which runs the industry’s settlements system for ticket sales, warned some airlines could stop flying to Venezuela amid a row over the freezing of $3.7 billion (2.66 billion euros) of cash owed to foreign airlines.

IATA Director General Tony Tyler said he had written to Venezuelan President Nicolas Maduro after a lack of progress in negotiations that began months ago.

“It is unacceptable that Venezuela is not playing by the rules to which it is treaty-bound,” Tyler said.

“I know some airlines are considering whether to stop flying (there) altogether. We very much hope that won’t be the case but each airline is making its own commercial decision,” he added.

Inflation in Venezuela hit 56 percent last year and helped spark opposition protests that have dragged on for close to a month.

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