GENEVA - Airline industry group IATA on Thursday halved its 2010 loss forecast for airlines to US$2.8 billion (S$3.918 billion) as a recovery led by Asia and Latin America proves stronger than expected.

"For a change today we have some good news to present. The good news is that we're cutting our loss forecast in half," said Giovanni Bisignani, director general of the International Air Transport Association.

"You may say it's still a red number ... it's probably too early to have a party ... but it's something very, very positive for the industry and a good signal for the economy."

Asian carriers are expected to post profit of US$900 million in 2010, reversing losses of US$2.7 billion in 2009.

"Cargo markets are particularly strong with long-haul cargo capacity for shipments originating in Asia experiencing a capacity shortage. Demand is expected to grow by 12 percent in 2010," IATA said.

Latin American airlines are also forecast to record profits of US$800 million for a second consecutive year.

With less debt than their European counterparts, Latin American carriers have also benefited from ties with Asia.

"We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery. The weakest international markets are North Atlantic and intra-Europe which have continuously contracted since mid-2008," said Bisignani.

European airlines will rack up the biggest losses, of US$2.2 billion, reflecting the "slow pace of economic recovery and faltering consumer confidence."

North American carriers will not fare much better, with losses of US$1.8 billion, as they face the same problems as their European counterparts.

World airlines suffered their biggest traffic decline since 1945 last year, making 2009 the "worst year the industry has ever seen," and can expect only a slow recovery overall in 2010, IATA had said.

Passenger demand fell 3.5 percent in 2009 while in the freight sector demand was down 10.1 percent.

IATA had been expecting 2010 losses of US$5.6 billion.

The association represents about 230 airlines accounting for 93 percent of scheduled international air traffic but does not include the major budget carriers.