Profits by airlines around the world are set to be far lower than previously forecast next year, the International Air Transport Association IATA said yesterday.

IATA, based in Geneva, said in a statement that it still estimated that airlines would make a total profit of €5.1 billion this year.

But next year this would fall to $3.5 billion from $4.9 billion expected earlier, and this could turn into a loss of $8 billion if the eurozone crisis spread.

“The eurozone crisis puts severe downside risk on the 2012 outlook as illustrated by the recently published OECD economic outlook,” IATA said.

“In a worst-case scenario, should the eurozone crisis evolve into a full-blown banking crisis and European recession, IATA estimates that the global aviation industry could suffer losses exceeding $8 billion in 2012.”

IATA chief Tony Tyler said the biggest threat to airline profits would be any failure by eurozone governments to resolve the debt crisis.

“Such an outcome could lead to losses of over $8 billion-the largest since the 2008 financial crisis,” said Tony Tyler, IATA’s Director General and CEO.

The global forecast for 2011 however remained unchanged at $6.9 billion, he added.

“But regional differences have widened, reflecting the very different economic environments facing airlines in different parts of the world. And the overall margin of 1.2 per cent tells you just how difficult the battle for profitability in this business is,” Tyler said.

In a worldwide review, IATA said it was the European companies which faced the greatest challenge.