Profits in the aviation industry are likely to drop to $4.5bn this year, the International Air Transport Association (IATA) said.
This is a marked decline from the surplus of $7.8bn the association predicted just last September.
It said the reasons for its revision were the slowing of global economic growth to 2.6% and an annual price of oil of $86 a barrel.
Giovanni Bisignani, IATA's director general and ceo, said: "We still expect a positive bottom line of $4.5bn, but it's turning out to be a very tough year."
He said "skyrocketing" fuel prices had been offset between 2004-2008 by more efficient aircraft and rising consumer confidence.
But he added: "The broadening impact of the US credit crunch has brought buoyant consumer confidence to an abrupt end.
"Oil prices continue to rise. Demand is softening and after the 64% improvement in labour productivity and an 18% reduction in non-fuel unit cost attained since 2001, efficiency gains are much more difficult to achieve."
IATA also said that load factors were falling with a 0.6% dip in February to 73.3% - the "most significant fall in four years."
Mr Bisignani said that oil now represented 32% of an airline's operating costs and a total annual bill for the industry of $156bn.
But IATA said it expected all regions, except Africa, to be profitable in 2008.
In Europe, it estimated profits would be $1.8bn instead of the $2.1bn it predicted last September.
The region facing the biggest possible drop is North America where IATA has revised its profit forecast from $2.8bn in September to a current $1.8bn.
Mr Bisignani also warned on the need for more industry consolidation.
"It's time for governments and labour to get serious about the future structure of the industry.
"A fragmented industry of over 1,000 players is generating net profit margins around 1% - in a good year.
"There is no secure long-term future for an industry that is constantly on the verge of intensive care," he said.