International Air Transport Association's bleak forecast of losses of more than $1bn for European airlines
More European airlines will go bust this year as their collective losses top $1bn (£642m), according to the industry body Iata.
The International Air Transport Association's bleak forecast, doubling the losses predicted in March, came despite a softening in oil prices to below $100 barrel. It warned that an intensified eurozone crisis and a return to higher fuel costs were real risks that could sink the industry further.
Brian Pearce, chief economist of Iata, said: "There is a serious risk to the financial viability of some airlines in Europe.
"We've already seen some European airlines going out of business this year and there remains a serious possibility it will continue."
Spanair, Spain's fourth-largest airline, and Malev, the Hungarian national carrier, went out of business in the first two months of 2012.
Globally, the industry forecasts $3bn profits on revenues of $631bn – a 0.5% margin.
Tony Tyler, chief executive of Iata, said the state of the industry was "fragile" and that "profitability is balancing on a knife edge".
He said even at improved prices, fuel remained at around 33% of airlines' operating costs, compared with just 13% 10 years ago. "It's our biggest challenge, and one with little predictability." Any deteriorating relations with Iran could have a severe impact on aviation, he said.
While Europe struggles, Asia-Pacific airlines continue to generate profits, albeit forecast at $2bn for 2012 compared with $4.9bn recorded in 2011. While official figures are not published, Chinese airlines are estimated to account for half of all global profits.
Pearce struck a further note of caution for airlines in noting that "asset utilisation" - the number of passengers on planes – had remained generally high. However, a surge in new aircraft being delivered in the next 24 months could weaken what Iata describe as a key driver of profitability.