International airlines are heading for a near USD$5 billion loss this year, largely due to the rise in oil prices, the industry's global body said on Tuesday.

The International Air Transport Association (IATA) said the projected gap comes despite a record 1.8 billion passengers carried by the 270 member airlines, up from 1.6 billion the previous year.

But airlines could earn a modest profit of some USD$1 billion to USD$2 billion next year if oil prices come down, IATA Director General Giovanni Bisignani told a news briefing.

IATA economist Brian Pearce said that the turnaround could come in 2005 after four years of losses if the fuel price averaged at around USD$34-36 a barrel.

"We are looking to losses of USD$4.8 billion to USD$5 billion for 2004," Pearce told reporters. "The implication is that this will be the fourth year of substantial loss as a result of the price of oil."

Fuel cost the industry some USD$62 billion in 2004, about USD$15 billion more than last year, according to Pearce. Airlines have been unable to pass on the full cost to the consumers, the economist added.

Airlines posted losses of USD$6.5 billion in 2003, which was an improvement over the period following September 11, 2001.

Airlines suffered losses of some USD$11.3 billion in 2002 and USD$13 billion in 2001.

At the end of November, the Geneva-based IATA had predicted only USD$4 billion in total losses for this year.

"The overall figures are terrible," Bisignani said.

Even if airlines were to make profits of some USD$1-2 billion next year out of revenues of some USD$350 billion, "that is a long way from making us a good investment", he said.

"Nevertheless, we have the basis of a profitable industry," said Bisignani, former head of Alitalia.

(Reuters)