This is the revised loss estimate by the International Air Transport Association (IATA), which is nearly double it previous forecast in December.

Industry revenues are also expected to fall by about 12 per cent, or US$62 billion.

Reflecting the rapid deterioration of the global economic conditions, demand is projected to fall sharply, with passenger traffic expected to contract by 5.7 per cent over the year. Cargo demand is expected to fall by 13 per cent..

IATA also revised its forecast losses for 2008 from US$5 billion to US$8.5 billion. The fourth quarter of 2008 was particularly difficult as carriers reported large hedging-related losses and a very sharp fall in premium travel and cargo traffic.

Asia Pacific carriers continue to be hardest hit by the current economic turmoil. They are expected to post losses of US$1.7 billion, with a 6.8 per cent fall in demand overall.

IATA's Director General and CEO Giovanni Bisignani on Tuesday said the state of the airline industry today is 'grim'. Combined with an industry debt of US$170 billion, the pressure on the industry balance sheet is 'extreme.'

Only falling fuel prices are helping to curb even larger losses. But weak consumer and business confidence is expected to keep spending and demand for air transport low.

'The industry is in intensive care. Airlines face two immediate fundamental challenges: conserving cash and carefully matching capacity to demand,' said Mr Bisignani.

The IATA chief also cautioned that recovery from the crisis would not come without change: 'Bailouts are not the prescription to return to health. Access to global capital, the ability to merge and consolidate and the freedom to access markets are needed to run this industry as a normal profitable business.'

IATA represents some 230 airlines comprising 93 per cent of scheduled international air traffic.