The International Air Transport Association cut its forecast for industry losses this year to $1.7 billion from a June estimate of $3 billion.

The Tokyo-based group said the improvement comes on stronger than anticipated economic growth that has boosted airline revenues, and restructuring that has raised passenger load factors to record levels.

Airlines posted losses of $3.2 billion in 2005.

Passenger traffic grew 6.4 percent and cargo 5.3 percent through the first seven months of 2006.

North American airlines have recovered significantly and are expected to return to operating profitability this year, IATA said in a release, though restructuring costs will limit the reduction in net losses to $4.5 billion.

European carriers' profits are forecast to rise to $1.8 billion, on strong growth in premium traffic and double-digit growth in Asia-Europe markets.

Profits for Asian airlines are expected to weaken slightly, to $1.7 billion, as low-cost carriers take a bigger share of regional routes.