The world's airlines are expected to lose nine billion dollars this year, industry body IATA said on Monday in a drastic reassessment of the worst slump the industry has yet faced.
The forecast is almost double an estimate made just three months ago by the International Air Transport Association, making the crisis worse than the aftermath of the September 11, 2001 attacks in the United States.
Combined with a revised estimate that it lost 10.4 billion dollars in 2008, the industry now looks set to lose almost 20 billion dollars over two years.
"There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken," IATA director-general Giovanni Bisignani told the association's annual meeting.
Despite lower fuel charges, airlines will suffer from a drop of eight percent in passenger demand and 17 percent in cargo demand in 2009 as the global economy grapples with its worst recession since the 1930s.
The recent spread of swine flu from Mexico is also having an impact on air travel even though it has proved to be far less lethal than feared.
"There are signs that people are beginning to panic, they are cancelling their flights, some are also postponing their flights," Idris Jala, chief executive of Malaysia Airlines, told reporters at the meeting.
Carriers in all regions are expected to report losses in 2009, with Asia-Pacific airlines -- once the brightest spot of the industry -- accounting for more than a third of the global losses at 3.3 billion dollars.
"This is the most difficult situation that the industry has faced," Bisignani said, calling for greater liberalisation in the industry.
IATA says it represents about 230 airlines accounting for 93 percent of scheduled international air traffic.
In March, IATA had forecast 2009 losses at 4.7 billion dollars, but it was forced to drastically raise the figure as well as revise 2008 industry losses up to 10.4 billion dollars, from an earlier estimate of 8.5 billion dollars.
Bisignani said the impact of the global financial and economic crisis was worse than that of the 2001 attacks in the United States.
After the attacks, global airline revenues tumbled by 7.0 percent and it took three years for the industry to recover despite a strong global economy, he said.
"This time we face a 15 percent drop -- a loss of revenues of 80 billion US dollars -- in the middle of a global recession," he said.
The industry is expected to generate 448 billion dollars in revenues in 2009, down from 528 billion dollars in 2008.
Bisignani said up to 100,000 aviation industry jobs worldwide could be at risk this year "unless we see the economic situation improving."
But he warned that even an economic recovery could complicate things if "greedy speculation" sends oil prices rising again.
"Our future depends on a drastic reshaping by partners, governments and industry. We cannot bear the cost of government micro-regulation, crazy taxation and partners abusing their monopoly power," the IATA head said.
Akbar Al Baker, chief executive of Qatar Airways, played down the forecast.
"Where did he get the figures? He is just estimating," he told AFP, adding that his company was still determined to order 200 new planes from 2009 to 2017 in addition to the 84 now in its fleet.
But Shukor Yusof, an aviation analyst with Standard & Poor's Equity Research in Singapore, said "my own feeling is that it could even get worse, depending on how the next six months pan out."
Despite the grim numbers, IATA said its members were still committed to controlling emissions by the fuel-hungry industry.
"Today we have taken a major step forward by committing to a global cap on our emissions in 2020. After this date, aviation's emissions will not grow even as demand increases," Bisignani said.