The airline industry group IATA cut its 2012 profit forecast for the airline sector to $3.0 billion ($2.3 billion) from $3.5 billion on Tuesday as tensions in the Gulf push fuel prices up. If fuel prices were to soar to $150 a barrel from about $120 at the moment, some airlines could even go bankrupt, warned International Air Transport Association chief Tony Tyler.
The latest figures foresee bigger-than-expected profits for the global airline sector last year, but a drop of about 60 percent this year. Although IATA cited the European debt crisis as the main risk in December 2011, this threat has now been "taken off the table," it said.
Rather, soaring fuel prices amid supply fears spurred by concerns over Middle East supplies are now key threats to the industry. IATA had based its initial industry earnings estimate on a forecast fuel price of $99 a barrel in 2012, but prices have now soared to about $120, with an annual average expected at around $115.