The International Air Transport Association (IATA) has downgraded its airline industry outlook for 2011 to US$8.6 billion from the US$9.1 billion it estimated in December 2010. This marks a 46% fall in net profits compared to the US$16 billion (revised from US$15.1 billion) earned by the industry in 2010. On expected industry revenues of US$594 billion, the US$8.6 billion 2011 profit equates to a net profit margin of 1.4%. Giovanni Bisignani, IATA’s Director General & CEO, said that spiralling oil prices caused by the continuing unrest in the Middle East was the main factor affecting airlines’ profits this year.”Political unrest in the Middle East has sent oil over US$100 per barrel. That is significantly higher than the $84 per barrel that was the assumption in December. At the same time the global economy is now forecast to grow by 3.1% this year
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