UPDATE: Airlines Facing Steeper Global Losses For 2009, Trade Group Says

By Christopher Hinton

NEW YORK (Dow Jones) -- The International Air Transport Association significantly expanded its industry-loss forecast Tuesday, reflecting expectations for a heavy slump in travel for the Asia Pacific, Europe and Latin America regions.

For 2009, the Montreal-based IATA said it now expects an aggregate industry loss of $4.7 billion, compared to $2.5 billion in red ink that it forecast in December.

"The state of the airline industry today is grim," said Giovanni Bisignani, head of the trade group. "Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago."

IATA represents some 230 airlines that account for 93% of scheduled international air traffic.

Hardest hit will be the Asia-Pacific region, where carriers are expected to post losses of $1.7 billion, compared to IATA's earlier forecast of $1.1 billion for 2009. Demand for travel to and from China is expected to contract between 5% and 10%, while the region's largest market, Japan, will likely see its gross domestic product shrink by 5.5%, under the revised forecast.

European carriers are expected to post a $1 billion loss for the year with a 2.9% drop in the region's GDP, the group said. Latin America's GDP is forecast to grow, but a collapse in the demand for commodity products will likely lead to 7.8% decline in air traffic.

For its part, North America is expected to deliver the best regional performance, with 2009 profit pegged at $100 million, as the industry offsets a steep falloff in demand with seat-capacity cuts, IATA said.

Overall, industry revenues are now expected to fall by 12% to $467 billion in 2009, exaggerated by even greater weakness in premium traffic than previously forecast, while passenger traffic as a whole will likely decline 5.7%, the group said.

Among the major domestic carriers, Delta Air Lines (DAL) and United Airlines parent company UAL Corp. have announced sharp reductions in their international capacity as air-traffic demand has declined, with smaller cuts for Continental Airlines (CAL) and AMR Corp. (AMR), the parent of American Airlines.

In Europe, Deutsche Lufthansa , Aer Lingus and Air France-KLM have warned of a tough 2009. .