IATA: Airline industry profits to plunge 49%

THE airline industry’s profits next year will fall 49%, more than predicted earlier, as the sovereign-debt crisis in the euro region hurts economic growth, the International Air Transport Association (IATA) said.

This news comes as Aer Lingus revealed that its total booked passenger numbers in November, including those on its Aer Lingus Regional operations, increased by 8.8% on the same month in last year.

Total Aer Lingus passenger numbers carried last month were 699,000, up 7% on November 2010.

The airline carried 624,000 passengers on its short haul routes, an increase of 7.4%, while long haul booked passengers numbered 75,000, up 4.2% on November 2010.

The airline’s booked load factor, which is a measure of seats filled, increased by 3.1 points to 75.4%.

Aer Lingus Regional’s total booked passenger numbers in November 2011 were 69,000, an increase of 30.2% compared with November 2010.

Meanwhile, according to the IATA, net income will drop to $3.5 billion (€2.6bn) in 2012 from $6.9bn this year, with the profit margin narrowing to 0.6% of sales from 1.2%.

The trade group forecast in September that global airline earnings in 2012 would total $4.9bn.

The industry may be unprofitable next year should the debt crisis “spiral out of control,” IATA said.

“In the past, whenever we’ve seen a small decline in travel markets caused by an economic deterioration, it’s very difficult for other markets to uncouple,” IATA Chief economist Brian Pearce said at the news conference. “Problems in Europe are likely to affect the rest of the world.”

European Union leaders are scheduled to meet this week in a new push to stave off debt defaults by some governments in the region.

Even a “relatively benign outcome” to the crisis will involve a short recession in Europe, IATA said in a statement.

Airlines in the region may report “small” losses next year, in contrast to North American and Asian carriers maintaining or raising earnings, the association said.