The global airline industry could likely halve its losses to $5,6-billion this year, down from the record $11-billion loss recorded in 2009, the International Air Transport Association (Iata) forecast on Monday.

It noted in its quarterly business confidence survey that the majority of airlines have indicated that their profitability had improved in the fourth quarter of last year, with 76% of respondents saying they expect profitability to improve in the coming 12 months.

Airlines were, however, not necessarily expecting a return to profit, but they were confident of being able to significantly narrow the losses made in 2009.

In what Iata called the worst year for the airline industry since 1945, 2009 saw a 3,5% drop in overall passenger demand and a 10,1% decline in freight demand.

The survey highlighted that while there was an overall improvement in the industry’s confidence, the level of confidence differed depending on region.

Asian airlines were the most positive about the current and future profitability outlook, while European airlines and those in the Americas were less optimistic.

However, the association pointed out that the majority of airlines have said that the worst was over and that a continued recovery in traffic and yields would drive profitability in the right direction, going forward.

Nevertheless, these improvements were still coming off a low base, while potential fuel price increase, the cost implications of regulatory changes and rising airport charges remained a concern for many airlines.

DEMAND RISING

Meanwhile, Iata reported that the expectations for improvements in demand levels for 2010 had risen back to levels last seen in 2007, with more than 82% of airlines expecting to see passenger demand picking up and 72% of airlines expecting cargo demand to rise.

In line with restocking activity, which was normally associated with the early stages of an economic recovery, 60% of respondents had said that air cargo traffic volumes had increased in the fourth quarter of 2009, Iata stated.

This was a turnaround for this market segment, where 87% of respondents had still reported falls in traffic volumes in October last year.

Further, the association reported that employment in the industry was stabilising to some extent, despite some retrenchments still taking place, as airlines reduce their head count in line with restructuring and cost cutting efforts.

Iata was, however, not expecting to see an expansion of airline employment in the foreseeable future, given that many of the respondents had indicated that they would hold employment levels constant in the coming months.