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Brighter outlook for international airlines

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The international airline business is improving, said an industry group Thursday, and while losses are still expected for 2010, they should be half the size previously forecast.

The International Air Transport Association, a group representing airlines around the world, revised its 2010 projections to a loss of $2.8 billion.

It was a very different picture just a few months ago, in December, when the IATA forecast a $5.6 billion loss for 2010. Recent signs of recovery in the industry prompted the change, the IATA said.

"The improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010," said the IATA, in its written report.

The IATA also lowered its loss estimate for 2009 to $9.4 billion from a prior forecast of an $11 billion loss.

The organization said airlines in Asia and Latin America are picking up the slack for the dismal market in North America and Europe.

"We are seeing a definite two-speed industry," said IATA chief executive Giovanni Bisignani, in a press release. "Asia and Latin America are driving the recovery. The weakest international markets are North America and intra-Europe, which have continuously contracted since mid-2008."

European carriers are expected to lose $2.2 billion in 2010, according to the IATA, followed by North America with a $1.8 billion loss. Carriers from Asia-Pacific and Latin America are expected to be profitable in 2010, the group said.

The IATA increased its 2010 forecast for worldwide passenger growth to 5.6% from a previously announced growth forecast of 4.5%. In 2009, passenger demand dropped 2.9%.

The group also raised its worldwide revenue forecast to $522 billion for 2010. That's $44 billion more than the prior forecast for 2010, and an increase of $43 billion from the prior year.

The organization said the airlines' capacity cuts -- in which they eliminated their least-efficient flights in the face of rising fuel costs -- have played a role in maximizing revenues. To top of page

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