The correspondence between Sir Mervyn King and George Osborn has become a regular event as the inflation rate has exceeded all the forecasts. There has already been 9 letters, in which the Chancellor explained the reason for the inflation to climb so high. The government has predicted 2% inflation target, but it reached 3%.
Experts expect rising fuel costs to erase the airline industry’s revenue this year, and the companies may lose up to 62% of their profits. Most probably, carriers’ revenue will fall from $7.9 billion to about $3 billion and the profit margin will approach to 0.5 % of sales. This forecast has been provided by IATA, headquartered at Montreal and Geneva, and the prediction is that this year airlines won’t earn more than $3.5 billion with a 0.6% margin.