The International Air Transport Association (IATA) today left its 2012 global airline profit forecast unchanged at $3 billion, but has almost doubled its forecast for losses at European airlines to $1.1 billion, as it expects Europe's debt crisis to worsen during the year.
The Geneva-based association comprising some 240 airlines raised its forecast for losses at European airlines to $1.1 billion from its March forecast of $600 million.
IATA warned that the euro zone debt crisis could increase and have an adverse impact on the airline industry.
"With little clarity on how European governments will manage the situation beyond providing further liquidity, the risk of a major downward shift in economic prospects is very real," said Tony Tyler, director general of IATA.
"The next months are critical and the implications are big," he added.
The latest forecasts come as top airline executives gather in Beijing for the association's annual general meeting, with concerns on high oil prices, increasing competition, and hike in government taxes.
"Fuel prices are now lower than previously anticipated, but that's on the expectation of economic weakness ahead," said Tyler.