The International Air Transport Association, which represents 240 airlines, said the industry would make a collective profit of $6.7 billion in 2012, up from a previous forecast of $4.1 billion.
In 2013, profits are expected to improve to $8.4 billion, up from a previous forecast of $7.5 billion, IATA said.
The improved outlook is driven mainly by belt-tightening and consolidation in North America in the face of what the airlines body described as a slowing world economy.
Carriers there are expected to make a total of $2.4 billion in 2012, up sharply from $1.7 billion last year, as airlines fly their planes with fewer empty seats and for more hours a day.
In Europe, airlines are no longer expected to post a combined loss this year but will merely break even, IATA said.
Asia continues to post sharp growth with profits of $3 billion expected this year despite concerns over a slowdown of growth in China and exposure to a weak cargo market.
Cargo markets, a barometer of world trade, are stagnant but may pick up in 2013 amid some signs of improved U.S. demand for consumer goods that tend to go by air, IATA officials said.
Airline activity is traditionally seen as a bellwether for the wider economy, with business confidence translating rapidly into demand for premium seats and just under half of global trade by value travel ling by air.
"The U.S. economy is growing but the threat of the fiscal cliff has not been eliminated," said IATA Chief Economist Brian Pearce, referring to the potential impact of steep tax hikes and federal spending cuts budget cuts scheduled to take effect on Jan. 1.
Pearce said world economy as measured by global industrial production was slowing down. International air travel closely tracks industrial production, a broad-based measure of economic activity and one of the most timely, Pearce told Reuters.
Consolidation Pressure
Europe's economic crisis is "far from solved," he said, something that could increase pressure on airlines there to consolidate.
"There are opportunities for further consolidation in Europe," said IATA Director General Tony Tyler, noting the presence of three clusters led by Air France-KLM, Lufthansa and British Airways-Iberia.
"Europe has a lot of airlines. One would expect those three groups would have a gravitational attraction to smaller carriers who find economic conditions too difficult to operate independently," Tyler told reporters.
However a shortage of finance caused by the region's economic crisis could slow the process down, he added. (Reuters)
