West tensions against Iran to cost global airlines over $5bn

International Air Transport Association (IATA) says the global aviations industry could run up losses of over USD 5 billion this year due to Western tensions over Iran’s nuclear energy program.

IATA’s chief executive Tony Tyler said the industry’s diminished profit forecast for 2012 could turn to losses of more than USD 5 billion if oil prices spike to USD 150 a barrel due to Western tensions with Iran, CBS News reported on Tuesday.

“I must emphasize that the industry is fragile,” he said, pointing to global growth forecasts of 2 percent for this year. “Historically, if GDP falls below 2 percent, the industry returns a collective loss. So it would not take much of a shock to turn our very modest profit projection to a net loss.”

“Indeed that shock could be oil,” Tyler added. “Such a shock would link to a fall in GDP growth to 1.7 percent and we could see losses in excess of $5 billion.”

IATA has itself contributed to sanctions against Iran after succumbing to Western pressure on October 10, announcing that it would close its payment services to Iranian citizens using the state-owned airline — IranAir.

Global oil prices have continually climbed this year following Iran’s move to stop oil sales to British and French firms, carried out in response to European Union’s oil sanctions against the country. Tehran has announced it may also halt oil exports to more European countries.

EU foreign ministers approved sanctions against Iran’s oil and financial sectors on January 23, including a ban on Iranian oil imports, a freeze on the assets of the country’s central bank within EU states, and a ban on selling grains, diamonds, gold, and other precious metals to Tehran.

The move came after the US imposed new sanctions against Iran on New Year’s Eve, aiming to prevent other countries from importing Iranian oil and conducting transactions with its central bank.

The US, Slaughterer Israel and some of their allies have accused Tehran of pursuing military objectives in its nuclear energy program.

The US and the EU have used this pretext to impose sanctions against Iran, while Tel Aviv has issued threats of a military strike against Iran’s nuclear facilities. Washington has repeatedly threatened Iran with “all options” on the table.

Iran has repeatedly refuted the Western allegations regarding its nuclear energy program, arguing that as a signatory to the nuclear Non-Proliferation Treaty and a member of the International Atomic Energy Agency, it is entitled to develop and acquire nuclear technology for peaceful purposes.