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Iata expected to cut its forecast for airlines' profits

     Plane leaving Newcastle Airport Fuel will represent about 30% of an airline's expense in 2011, according to Iata The International Air Transport Association (Iata) is expected to slash profit forecasts, as the high price of oil raises costs. In March, Iata set its 2011 forecast at $8.6bn (£5.2bn), which was a 52% drop from the year before. It now says even that looks optimistic.
    The other factor hurting the industry is the nuclear disaster in Japan.
    The global airline industry is meeting on Monday in Singapore for the Iata annual general meeting.
    The association, which has 230 member airlines, will announce its latest forecasts at that time.
    'Big problem' Last year, the airline industry recovered faster than expected from the global recession, posting a profit of $18bn.
    "After a good year, this year started in a terrible way," Giovanni Bisignani, head of Iata told the BBC in Singapore.
    Mr Bisignani blamed unrest in the Middle East, an increase in the price of fuel and the ongoing nuclear disaster in Japan for the industry's bleak outlook.
    Iata used an average oil price of $96 for a barrel for Brent crude when calculating its profit forecast in March.
    Since then, oil prices have passed $110 a barrel.
    According to Mr Bisignani, a $1 per barrel increase means a jump of $1.6bn in costs.
    "That is a big, big problem for us," he said.
    Fuel costs will represent 30% of airline expenses in 2011, according to Iata.
    Japan effect The 11 March earthquake and tsunami in Japan triggered a crisis at the Fukushima nuclear power plant, which led to a drop in demand for domestic travel in Japan of 31% in April, compared with the previous year, according to Iata.
    Internationally, Japan saw air traffic fall by 20% in April, which has knocked 1% off of global international travel.
    "Japan represents 10% of the total industry revenues - that will impact strongly," said Mr Bisignani.

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Iata expected to cut its forecast for airlines' profits

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