Top executives of the world's biggest airlines will gather in Berlin this weekend, seeking elusive answers to the future of the industry as they move past the financial crisis and the damage from Iceland's ash cloud. The International Air Transport Association holds its annual meeting in the German capital from June 6-8, followed by the ILA Berlin Air Show from June 8-13.

No one expects a sunny forecast from IATA given the industry's woes. The question, instead, is how bad is bad and what can airlines do to turn their fortunes around.

I don't think one will be able to say 'here's a concrete result of the AGM' but I think the purpose of it all is just to provide a forum where particular issues important to the industry may be raised and communicated to the public in order to influence lawmakers and regulators around the world, said Per-Ola Hellgren, an airlines analyst with LBBW in Germany.

I think the most immediate one is to provide some kind of framework for how the industry would like the shutdown of airspace to be regulated in future volcano ash crises, Hellgren added. I think that's going to be sort of the headline issue.

The Icelandic ash plume came at perhaps the worst possible time for the industry. The late-April closure of much of Europe's airspace for the better part of a week cost airlines as much as $1.7 billion, IATA has said.

IATA head Giovanni Bisignani called it devastating for an industry already forecast to lose more than $12 billion last year and this.

While the threat has faded in Europe, others have popped up elsewhere. A volcanic eruption in Guatemala last week closed the country's airport and spewed ash 5,000 feet high, while another in Ecuador had the same effect.

Defense CUTS AND THE EURO

Another topic likely to be on the agenda is national defense spending in an age of austerity. France and Germany in particular are looking at defense budget cuts as a way of bringing deficits in line.

Those cuts, in turn, could be disastrous for defense contractors like EADS, especially if the cuts are not specifically targeted. EADS has warned of a domino effect that could leave a whole series of programs underfunded if countries do not coordinate their actions.

I ask different countries, if possible, when they have to make savings, not to each go after a different program, EADS Chief Executive Louis Gallois told Reuters on the sidelines of the company's June 1 annual meeting. Some of those issues are likely to be discussed at the Berlin Air Show, the biannual event that follows the IATA meeting and which drew 120,000 trade visitors the last time it was held.

Less touted as a deal-making event than the Paris Air Show, it will nonetheless draw a prominent crowd with money to spend.

Mergers are likely to be a subject of intense discussion, or at least sideline speculation, given the pending combinations of British Airways with Iberia and United and Continental Airlines , among others.

The pace of consolidation has quickened, which should help returns, HSBC said in a review of the European airline sector and its prospects for earnings recovery.

One big question for aircraft maker such as EADS's Airbus and Boeing is what impact global airline consolidation will have on outstanding orders. Combined outstanding aircraft orders of the world's two leading planemakers total more than 6,500 aircraft.

One bright spot for the industry likely to draw some attention, though, is the euro's slide. The weaker euro will ultimately benefit European groups like EADS , as they earn their revenue in dollars but report results in euros.

Since mid-April, when the volcanic ash crisis began, the euro is almost 10 percent weaker against the dollar.

(Additional reporting by Maria Sheahan in Frankfurt; Editing by David Cowell)

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