Global airline industry soars toward recovery

NEW YORK (CNNMoney.com) -- The global airline industry is expected to pull out of its slump and make its first profit in three years, according to an industry group report Monday.

The International Air Transport Association said that it expects to make a profit of $2.5 billion in 2010, its first since 2007.

This is in contrast to a loss of $10 billion in 2009. "Our resilience has been tested by disease, war, terrorism, spiking oil prices and even a volcano," said Giovanni Bisignani, Chief Executive of the IATA, providing a list of the industry's troubles over the few years at a meeting in Berlin.

Going forward, Bisignani painted a picture of "cautious optimism." He noted that carriers in the Asia-Pacific region are expected to make the strongest recovery, with a profit forecast of $2.2 billion this year. Airlines in North America are also expected to do well, with a profit of $1.9 billion, and carriers in Latin America are projected to be in the black by $900 million.

"Global traffic is back to pre-recession levels," said Bisignani.

But he added that some areas are stronger than others. Carriers in the Middle East and Africa are expected to scratch out a total profit of $100 million in 2010, according to the IATA.

And Europe, which is particularly hard-hit by the recession, is the only region expected to suffer a loss, of $2.8 billion, said the industry group.

The Icelandic volcano that halted European travel earlier this year took much of Bisignani's blame for the Continent's projected loss. The erupting volcano caused a massive ash plume that grounded traffic across Europe, stranding 10 million travelers and costing the economy $5 billion, including $1.8 billion in lost airline revenue, according to the IATA.

Given the remaining challenges of the industry, Bisignani browbeat striking airline employees as "out of touch with reality."

He did not specifically mention British Airways (BAY), which is involved in a labor dispute with workers.

"Pilots and crew must come down to earth and strikes at this time are shortsighted nonsense," he said. "Labor needs to stop picketing and cooperate."

Another chief culprit is fuel price volatility, said Bisignani. He said the industry should "break the tyranny of oil" and switch to biofuels made from jatropha, camelina, algae "and even urban waste." This will also help the airlines to cut their carbon emissions by half over the next 40 years, he said.

He said that some carriers have made commitments to purchase biofuel planes. But he added that international governments should do more to spur the use of this new technology through stimulus funding, noting that they've spent "only" $600 million so far.

"Change is not to be feared but embraced," said Bisignani.