The International Air Transport Association (IATA) has halved its loss forecast for 2010 to $2.8bn, compared to the December 2009 forecast of $5.6bn.
According to IATA, the improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010.
In January, international passenger demand in the Asia-Pacific and Latin American segment increased 6.5% and 11.0% respectively.
However, in the North American and European segments, international passenger demand decreased 2.1% and 3.1% respectively during the same month.
IATA forecasts passenger demand, which fell by 2.9% in 2009, to increase by 5.6% in 2010, a 4.5% improvement on the previous forecast in December 2009.
Cargo demand, which declined by 11.1% in 2009, is also expected to grow by 12.0% in 2010, a significant increase on the previous forecast of 7%.
Yields are also expected to improve by 2% for passengers and 3.1% for cargo, driven by tighter supply and demand conditions in 2010.