The world's airlines will collectively lose US$9 billion this year - nearly double the previous projections - and face a slow recovery as the economic crisis saps air travel and cargo demand, an industry body warned on Monday.

The International Air Transport Association, which represents 230 airlines worldwide, increased its loss estimate from the US$4.7 billion it forecast in March, reflecting a "rapidly deteriorating revenue environment."

Although there has been growing signs of a bottoming out of the recession, IATA said the industry was severely hit in the first quarter with 50 major airlines reporting losses of more than US$3 billion.

Weak consumer confidence, high business inventories and rising oil prices pose headwinds for future recovery, the association said during a two-day global aviation conference in Kuala Lumpur.

Revenues are expected to decline by US$80 billion - an unprecedented 15 per cent from a year ago - to US$448 billion this year, and the weakness will persist into 2010, it said.

Economic meltdown

"There is no modern precedent for today's economic meltdown. The ground has shifted.

Our industry has been shaken. This is the most difficult situation that the industry has faced," said IATA Chief Executive Giovanni Bisignani.

The Geneva-based association also revised its estimated loss for last year to US$10.4 billion from US$8.5 billion previously.

It said passenger traffic for 2009 is expected to contract by eight per cent from a year ago to 2.06 billion travellers. Cargo demand will decline by 17 per cent and some 100,000 jobs worldwide are at risk, it said.

The association expects the industry fuel bill to shrink by US$59 billion, or 36 per cent, to US$106 billion this year, accounting for 23 per cent of operating costs with an average oil price of US$56 a barrel.

But crude oil prices have rallied in recent weeks, breaching the US$70-a-barrel level on Friday on hopes of economic recovery.

Bisignani urged governments to avoid protectionist policies and reiterated his call for more liberalisation such as the lifting of restrictions on routes and cooperation between airlines to bolster the global airline industry.

Draining cash

"It would be a cheap and effective stimulus ... liberalising key routes today would create 24 million jobs and US$490 billion in economic activity," he said.

Over the next three years, he said about 4,000 aircraft are scheduled to be delivered. This year alone, airlines are expected to spend about US$25 billion to take delivery of more than 800 Western-built jets, draining cash for a second straight year.

"Aircraft ordered in good times are being delivered in recession," Bisignani said. "Finding customers to fill them profitably will be a challenge."

IATA said carriers in all regions were expected to report losses, with Asia-Pacific to be the hardest hit amid a sharp slowdown in its three key markets - Japan, China and India. The region's carriers are expected to post losses of $3.3 billion, worse than the previous forecast of US$1.7 billion but better than the US$3.9 billion losses last year.

North American carriers are expected to lose US$1 billion, far better than its US$5.1 billion losses in 2008, thanks to early capacity cuts and limited hedging by US airlines.

Despite strong traffic, Middle East carriers will see losses deepen to US$1.5 billion as the region's intercontinental hubs are vulnerable to recessionary impacts in Europe and Asia.

A collapse for demand in premium services in all major markets will see European airlines lose US$1.8 billion.

Latin American carriers are expected to lose US$900 million and African airlines US$500 million.

- AP