However, the anticipated 2010 profit of $2.5 billion is only a 0.5 percent return on revenues, showing the fragile financial situation of the industry. IATA statistics show that the region's carriers have managed to increase demand at even higher levels of 16.8 percent in July and 19.4 percent over the first seven months of the year. Load factors and financial performance will record improvements this year.

Overall, the passenger and cargo traffic demand continue to show upward trends in the month of July 2010.

"It is clear that the recovery has entered a slower phase. During the second half of 2009, demand was rebounding at an annualized rate of 12 percent for passenger and 28 percent for cargo. In the year to July, the annualized growth rates had dropped to 8 percent for passenger and 17 percent for airfreight. However, this is still considerably above the industry's traditional 6 percent growth trend," IATA said in a statement .

"The recovery in demand has been faster than anticipated. But, as we look toward the end of the year, the pace of the recovery will likely slow. The jobless economic recovery is keeping consumer confidence fragile, particularly in North America and Europe. This is affecting leisure markets and cargo traffic. Following the boost of cargo demand from inventory re-stocking, further growth will be largely determined by consumer spending which remains weak," said Giovanni Bisignani, IATA's director general and CEO.

"Costs are a critical element. This year has been marked by strikes and threats of strikes at airlines, and with airports and air navigation service providers. Avoiding strikes at BAA and AENA, Spain's provider of air navigation services, were major accomplishments. We are all in this together-including all our partners in the value chain and those who work in this financially fragile industry. It is not the time for strikes. We must work together to secure our future by finding solutions to reduce costs," said the director.

He also said the need for a regulatory structure that facilitates consolidation across political borders. "The crisis has seen consolidation in Europe and the US. This month's merger announcement by LAN and TAM brings Latin America into the picture. But we remain an industry of over a thousand players with only very limited opportunities to consolidate as a result of the antiquated bilateral system's restrictions on ownership. The business realities of the industry are changing. It is critical that governments find a modern regulatory structure that is free of outdated ownership restrictions and able to facilitate opportunities for consolidation globally-something that other industries take for granted," said Bisignani.