The International Air Transport Association (IATA) says airlines' profits will almost halve this year because of the recent jump in oil prices.
IATA downgraded its profit forecast from $US9.1 billion to $US8.6 billion this year. Airlines collectively made $US16 billion in 2010.
Air New Zealand chief financial officer Rob McDonald says surging oil prices threaten profits, even though the airline is well-hedged over coming quarters against price movements.
He says the surge clearly presents quite a challenge to the industry as a whole and it will have to adjust over time if the higher oil prices persist.
