IATA has downgraded its 2012 financial forecast for Asia-Pacific carriers by US$300 million to US$2.0 billion after a generally poor first quarter offset the benefits of the post-tsunami recovery in Japan.
The Middle East has also been downgraded since the last IATA forecast in March, with the region expected to see profits of US$400 million rather than US$500 million.
Both regions are seeing significant drops from 2011 profit levels, when Asia-Pacific carriers made US$4.9 billion - itself a significant drop from the 2010 peak of US$8 billion.
The Middle East forecast, meanwhile, would see profits more than half from US$1 billion in 2011. The Middle East has, however, been the beneficiary of 80% of the improvement in cargo markets during the past six months, IATA estimates.
IATA says that cargo demand has bottomed out, following a sharp fall in 2011, in line with the moderate improvement of business confidence in a number of economies outside Europe. "But the upturn is weak and narrowly based, with only Middle Eastern airlines seeing significant volume gains. European economic weakness is expected to limit any further improvement."
IATA's overall global forecast remains unchanged since March at US$3 billion, but, as the trade body notes, the forecast hasn't changed but virtually everything else has.
"Demand has been better than expected, so far this year. And fuel prices are now lower than previously anticipated, but that’s on the expectation of economic weakness ahead. The Eurozone crisis is standing in the way of improved profitability and we continue to face the prospect of a net profit margin of just 0.5%,” said Tony Tyler, IATA’s director general.
Europe has been massively downgraded to a projected loss of US$1.1 billion, US$500 million worse than forecast in March.
Conversely, North American carriers are expected to post a profit of $1.4 billion. That is up from the March projection of $0.9 billion, while Latin American carriers are expected to make US$400 million, up from US$100 million projected in March.