International airlines may lose US $4.7 billion this year as a result of the global recession, according to the International Air Transport Association IATA.

Cuts in spending for individuals and a decline in production at factories has led to fewer airline passengers and less cargo being shipped around the world. Despite lower fuel prices than last year, airlines everywhere are struggling with sluggish demand.

The IATA, which represents 230 airlines, also raised its estimate of international airline losses in 2008 to $8.5 billion, from its previous $8 billion estimate.

The Swiss-based body said its latest forecast is based on a view that the economy and air transport demand will hit bottom by mid-2009 and then start to recover.

Leading airlines in USA and other countries have slashed fares to encourage continued travel and unveiled a range of cost-cutting measures to stay afloat throughout the economic slump.

The group predicts fares will stay low throughout the year while airlines compete for the business that remains until global economic activity rebounds.

Carriers in North America are expected to deliver the “best performance” among the world’s regions with an estimated $100 million profit, IATA said, crediting their strength to early capacity cuts and relatively little fuel hedging that has permitted them to benefit from sliding oil prices.

European carriers are expected to lose $1 billion in 2009 as a result of the recession that continues to drag down both economy and premium demand worldwide.

According to the IATA, international passenger demand fell 5.6 percent in January compared to the same month a year ago. The IATA’s February traffic figures are due to be released later this week.