Canada's airlines can expect a second consecutive year of losses in 2012, according to a report released this morning by the Conference Board of Canada.
"The Canadian air transportation industry is set for a bumpy flight over the coming months," said Michael Burt, the board's director of industrial economic trends.
According to the report, fuel prices rose more than 30% in 2011, causing the airline industry to lose $900 million. While oil prices have cooled off in the first of the year, the Conference Board forecast that the industry will still lose another $165 million in 2012.
Burt said that with global economic uncertainty, Canadians are turning their attention to paying down their debt and are growing more cautious when it comes to spending.
"Given this weaker confidence and the deceleration in world economic growth, Canadian consumers and businesses are likely to be more cautious about their travel spending in the coming months."
The board is forecasting that the industry will be back in the black in 2013, but with a profit of $231 million, which translates into a profit margin of just 1.2%.
