The airline industry’s losses for next year will reach $5.6bn – $1.8bn higher than previously predicted by Iata.

But even with the upward adjustment, the massive loss is just over half of what the airline industry is predicted to lose this year – $11bn.

Iata director general and chief executive Giovanni Bisagnani described 2009 as an “annus horribilis” in a decade of massive airline losses totaling $49.1bn.

However – in a rare show of optimism – Bisagnani said 2010 was likely to be an improvement on this year:

“For 2010, some key statistics are moving in the right direction.

“Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%.”

Industry observers hoped September’s slight upturn in passenger traffic – 0.3% – heralded a recovery.

At the time Bisagnani said: “The worst may be over in terms of the fall in demand, but yields continue to be a disaster and costs are rising. The airline industry remains firmly in the red with a fragile business environment.”

European carriers will generate the biggest losses of any region next year at $2.5bn, although this is an improvement from the $3.5bn expected for 2009.

A combination of slow economic recovery, rising fuel costs and crowded airports is making it hard for airline’s to trim capacity and so improve yield.

Passenger yields fell by 12% in 2009 compared to 2008 and are not expected to improve next year.

They are being squeezed by excess capacity and a sharp drop-off in business traffic, which is showing little sign of pick-up.

Overall revenues are predicted to rise by 4.9% to $478bn next year, 11% below the $535bn peak of 2008.

Iata also revised its passenger traffic figures up from 3.2% to 4.5% next year, meaning a total of 2.28bn people will fly in 2010, bringing total passenger numbers back to 2007 levels.