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Emirates expects more airlines to go under

28 March 2012

Emirates said more carriers will go bust this year as fuel costs and sluggish economies undermine profitability.

Airline profits will plunge 62 per cent in 2012 to $3 billion, equal to a 0.5 per cent margin on sales, as oil prices rise, the International Air Transport Association said this week. Emirates’s fuel bill accounts for 45 per cent of costs and may jump by an “‘incredibly challenging'” $1.7 billion in the year ending March 31.

Emirates president said some private airlines will need to be bailed out by governments in the countries where they’re based, though that will raise aid issues with the European Union and other parties.

In the United States, more filings for Chapter 11 protection are likely, while smaller carriers operating in the Indian Ocean region and in Africa face “difficulties,” the executive said.

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