June 8 (Bloomberg) -- Airline losses worldwide may total $9 billion in 2009, nearly double a previous forecast, as an outbreak of swine flu compounds the effects of the recession, the industry’s main trade group said.

Sales may fall 15 percent to $448 billion this year from $528 billion in 2008, the International Air Transport Association said in a statement distributed at its annual meeting in Kuala Lumpur today.

“This is the most difficult situation that the industry has faced,” IATA Chief Executive Officer Giovanni Bisignani said. “Our future depends on a drastic reshaping by partners, governments and industry.”

The recession has hammered premium-class traffic as business travelers switch to cheaper seats, forcing British Airways Plc and Cathay Pacific Airways Ltd. to losses. China Eastern Airlines Corp. and Shanghai Airlines Co., plan to combine to cut competition in the world’s fastest-growing aviation market and help both carriers return to profit.

There’s “nothing we can do in the current environment to stimulate traffic, particularly in the premium market,” said British Air’s Chief Executive Officer Willie Walsh in Kuala Lumpur. “It doesn’t respond to pricing activity.”

Plunging Traffic

Passenger traffic may fall by 8 percent and cargo demand will slump 17 percent, IATA said. The group was forecasting an industry loss of about $4.7 billion for 2009 as recently as March 24.

Carriers in North America may report a loss of $1 billion for the year, IATA said, reversing a prediction of a profit of $100 million for the region’s airlines. Other regions’ airlines will also be unprofitable, led by losses of $3.3 billion in the Asia-Pacific region and $1.8 billion in Europe, IATA said. The Geneva- and Montreal-based association was forecasting losses of $1.7 billion for Asian carriers and $1 billion for European airlines.

“The industry is the victim of the global recession and swine flu,” said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. “The two factors are sweeping away their cost-reduction efforts.”

New Planes

Airlines will spend about $25 billion to take delivery of more than 800 western-built jets in 2009, meaning the industry will consume cash for the second consecutive year, IATA said

“Aircraft ordered in good times are being delivered in recession,” Bisignani said in a speech to airline executives. About 4,000 planes, or 17 percent of the current fleet, are due to be delivered in the next three years, he said. “Finding customers to fill them profitably will be a challenge.”

As airlines try to scale back capital investment to curb losses, International Lease Finance Corp., the biggest customer of Airbus SAS and Boeing Co., expects more carriers to lease more planes. The company will increase the planes on order by 20 percent to 30 percent.

“We are seeing a significant replacement demand and fleet modernization demand in the next five years,” Chief Executive Officer Steven Udvar-Hazy said at the conference today.

Yields, a measure of average revenue per passenger, will fall an estimated 7 percent this year as fewer people purchase first- and business-class tickets and airlines reduce fares in an effort to win market share, Bisignani said.

To contact the reporter on this story: Andrea Rothman in Toulouse, France, at aerothman@bloomberg.net; Angus Whitley in Kuala Lumpur at awhitley1@bloomberg.net

Last Updated: June 7, 2009 22:27 EDT