Geneva - Airlines will suffer losses of 4.7 billion dollars in 2009, the International Air Transport Association said Tuesday, downgrading a previous forecast.

"The state of the airline industry today is grim," Giovanni Bisignani, the head of the IATA, said.

A forecast at the end of last year had predicted a 2.5 billion dollar loss.

The IATA also revised its estimate losses for 2008 from 5 billion dollars to 8.5 billion, citing a particularly bad fourth quarter.

While falling fuel prices have helped the industry, hedging against peak oil before the drop led to significant losses for many companies. In 2009, low fuel costs are expected to help mitigate losses elsewhere.

Also adding to the worse than expected fourth quarter was a "collapse of freight demand," which was down 23 percent, a drop unprecedented since World War II.

Air passenger traffic is expected to contract this year by 5.7 per cent, and premium traffic will decline even more sharply, causing significant revenue losses. Cargo demand will drop by an estimated 13 per cent.

Asia Pacific carriers are expected to take the hardest hit, while North America will see a small profit of 100 million dollars, the estimates said.

Europe's carriers are expected to lose 1 billion dollars in 2009. Latin America, Africa and the Middle East will all suffer losses as well.

"Expecting a significant recovery in 2010 would require more optimism than realism," Bisignani said in his outlook. (dpa)