More 2012 European Airline Bankruptcies Forecast

The International Air Transport Association has forecast a wave of new European airline bankruptcies this year, with combined losses of over $1bn predicted.

That's a scenario two-times worse than IATA anticipated back in March and one related to the ever-deepening Eurozone crisis and the escalating costs of fuel.

"There is a serious risk to the financial viability of some airlines in Europe", IATA's chief economist, Brian Pearce, explained in a statement. He added: "We've already seen some European airlines going out of business this year and there remains a serious possibility it will continue."

2012 Airline Bankruptcies

Already this year, airlines with a significant presence at some of the world's major airports have been lost, among them the Hungarian national airline, Malev - among the highest-profile 2012 airline bankruptcies yet reported.

Currently predicted for the world's airlines this year are $3bn in profits and, according to IATA's chief executive, Tony Tyler, the air travel industry is in a "fragile" state.

Just a decade ago, fuel costs represented approximately 13 per cent of any one airline's expenditure, on average. Now, they've more than doubled and, says Tyler, any deterioration in international relations could further spike these prices.

European Airline Losses

The forecast European airline losses don't, however, fully reflect the state of play in regions like Asia, where business is brisk. In the absence of fully-authenticated data, it's nonetheless thought that Chinese airlines contribute towards around 50 per cent of the global airline profit total and, just today, it's been announced that China's set to construct 70 new airports over the coming three years.

"For European carriers, the business environment is deteriorating rapidly, resulting in sizeable losses", IATA's Tyler explained in a statement. "The biggest and most immediate risk, however, is the crisis in the Eurozone. If it evolves into a banking crisis, we could face a continent-wide recession - dragging the rest of the world and our profits down."

Image copyright ‘ChrisZ' - Courtesy Wikimedia Commons