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THE International Air Transport Association (IATA) is expecting the industry to continue posting losses this year despite signs of economic improvement in almost all corners of the world.

IATA explained that the improvement in cargo volume does not always result in bigger profits for carriers.

The latest IATA report showed international cargo demand improved 28.3% in January with only a 3.7% increase in capacity. This pushed cargo load factor to 49.6% compared with the 40.1% registered in the same period in 2009.

Passenger demand was up 6.4% with a 1.2% increase in capacity in January that pushed load factors to 75.9%, slightly higher than the 72.2% recorded for January 2009.

“Airlines have lost two to three years of growth. Demand is moving in the right direction. The 3% increase in freight volumes from December to January is particularly encouraging. We can start to see the future with some cautious optimism, but better volumes do not necessarily mean better profits. Passenger yields are still 15% below peak. And we expect 2010 losses to be $5.6 billion,” IATA director general Giovanni Bisignani said in a report.

“There are large geographical differences in the improvements. The strongest upturns have been seen in markets where economic recovery from the recession has been strongest—Asia, Latin America and the Middle East,” Bisignani explained.

While freight traffic regained about 28%, it is still 3-4% below the early 2008 peak. The sharp improvement in air freight that accelerated to 3% in January compared to December is being driven by businesses re-stocking depleted inventories.

IATA explained that this part of the inventory cycle will not last much longer and durable air freight growth will require consumers to start buying again and businesses to return to making investments.

Passenger traffic, meanwhile, has not yet recovered from the losses of 2008 and early 2009, IATA said. Demand must improve by a further 2% to return to the peak levels of early 2008.

Asia-Pacific carriers experienced a 6.5% increase in demand compared to the previous year. Of the improvement in demand seen since the early 2009 low point, 31% has been realized by carriers in the region which is leading the global economic recovery.

Carriers in North America and Europe saw demand increase 2.1% and 3.1%, respectively. Although both regions have gained 6% from the early 2009 lows, they remain 4-6% below the early 2008 peak levels.

Middle Eastern carriers grew throughout the recession. Growth accelerated to 23.6% in January.

Latin American carriers saw demand rise 11% in January on the back of a strong regional economy.

African carriers recorded a 6.3% improvement in January, assisted by robust regional economic activity.

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