Airlines have started witnessing an improvement in demand but, instead of profits, might register losses to the tune of USD 5.6 billion this year, says the latest International Air Transport Association (IATA) report.

"The three per cent increase in freight volumes from December to January is particularly encouraging. We can start to see the future with some cautious optimism. But better volumes do not necessarily mean better profits. Passenger yields are still 15 per cent below peak levels and we expect 2010 losses to be at USD 5.6 billion," IATA Director General and CEO Giovanni Bisignani said in a statement.