Watch CBSN Live

Airline Industry Rebounding Strongly

Global airlines have rebounded faster than expected from the recession after losing nearly $26 billion over 2008 and 2009, the industry association said Tuesday, raising its profit forecast for this year.

The International Air Transport Association said airline profits for 2010 will likely total $8.9 billion on revenue of $560 billion, more than the group's forecast in June of $2.5 billion profit on sales of $545 billion.

"This is a significant improvement, but not enough for a big celebration," IATA chief executive Giovanni Bisignani said at a news conference in Singapore.

The global economy, led by Asia, has made a quicker recovery from last year's recession than the IATA expected, helping to boost passenger numbers and cargo. Global demand will likely expand 11 percent this year while capacity or the number of seats will grow 7 percent, the IATA said.

Airlines had losses of $9.9 billion last year and $16 billion in 2008. The IATA represents about 230 airlines accounting for 93 percent of international air traffic.

Asia will lead growth this year with a $5.2 billion profit while Europe will remain the only region to lose money, the IATA said. North American airlines should earn $3.5 billion this year as U.S. carriers keep capacity limited, according to the group.

Global airline profit is forecast to fall to $5.3 billion next year as government stimulus spending slows, some countries implement austerity measures and unemployment rates remain high in developed nations.

"It's clear there will be a slowdown in the fourth quarter," Bisignani said. "2010 is as good as it gets. It will be the peak of the cycle. 2011 will be a much tougher year."

IATA expects crude oil to average $79 a barrel this year and next, but sees fuel oil rising to $93 from $90, helping to raise the industry's overall expenses to $575 billion in 2011 from $539 billion in 2010.