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European debt crisis helps, hurts airlines

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Jeremy Hobson: Today, the Greek government is expected
to announce more spending cuts — including public sector layoffs — as it tries to show its taking the steps necessary to secure more bailout funds. The economic turmoil in Europe has already
had a negative impact on all kinds of things.

But as Marketplace’s Alisa Roth reports, the airline industry is, so far, not one of them.

Alisa Roth: The weak euro means more tourists are flying into Europe, and more exports are flying out.

George Hamlin is an aviation consultant. He says the industry outlook there could change if the European debt crisis doesn’t get resolved.

George Hamlin: It could be pretty terrible for overall economic activity and for traffic originating in Europe.

I.A.T.A. — the International Air Transport Association — predicts global airline profits will decline next year, and European carriers will be the worst-hit.

But American carriers, like United and Delta will be affected, too, because trans-Atlantic flights are still their most-traveled long-haul routes.

Roger King is an airline industry analyst at Credit Sights. He says there’s another issue airlines have to contend with: fuel prices.

Roger King: There are other variables that the airlines can use to counteract economic weakness, but the one thing they cannot counteract is the price of oil.

Oil prices have defied the economic slowdowns in the U.S. and Europe. I.A.T.A. expects them to stay high next year.

I’m Alisa Roth for Marketplace.

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