IATA chops industry profits forecast for 2008

The International Air Transport Association (IATA) altered its forecast for industry profits in 2008 on Wednesday, warning that any expected growth would be slowed by the spiralling cost of fuel and the impact of the credit crunch in the US.

With oil prices approaching $100 a barrel, IATA has cut down its forecast for 2008 industry profits to $5 billion. This alters its September forecast of $7.8 billion in profits for 2008, which was based on oil at $70 a barrel.

"A favourable economic environment and effective efficiency measures helped mitigate the impact of high fuel prices and underpinned stability improvements,'' said IATA director general Giovanni Bisignani in a statement.

''With the credit crunch, that is changing. The peak of the business cycle is over, and we are still $190 billion in debt. So we could be heading for a downturn with little cash in the bank to cushion the fall," he said.

IATA's forecast for industry profits for 2007 stands at $5.6 billion.