Global airlines are likely to lose $9 billion this year, the International Air Transport Association said on Monday, nearly double its estimate of just three months ago, as rising fuel prices and weak demand create an unprecedented crisis for the industry.

This is the most difficult situation the industry has faced, Giovanni Bisignani, IATA's director general and CEO, told the aviation body's annual meeting in the Malaysian capital.

I am a realist. I don't see facts to support optimism.

However, there was some optimism. John Leahy, the commercial director at European aircraft manufacturer Airbus said 2009 would be tough, but plans by United Airlines to order as many as 150 new planes from Airbus or rival Boeing Co showed the market was starting to turn.

Cancellations are not as much of an issue as deferrals. I don't think we'll have that many more cancellations, he said.

Speaking on the sidelines of the meeting earlier, the chairman of state-owned Air India said his company was considering delaying planes on order from Boeing.

We are looking at options including rescheduling, Arvind Jadhav told reporters. I don't have cash, what do you expect me to do?

Air India has over $8 billion worth of planes on order from Boeing, including 27 B787 Dreamliners.

Cathay Pacific <0293.HK>, Hong Kong's largest carrier, said it was also looking to further delay deliveries of new planes as it had seen no signs of recovery in its business.

One note of optimism, however, came from Qatar Airways, which has about $27 billion worth of planes on order and wanted deliveries speeded up, its chief executive said.

FUEL COSTS

Globally, about 4,000 aircraft are scheduled for delivery in the next three years, which is 17 percent of the current fleet, IATA's Bisignani said.

Once again, aircraft ordered in good times are being delivered in recession. Finding customers to fill them will be a challenge, he said.

IATA had predicted in March that 2009 losses for the airline industry would total $4.7 billion. It also revised its estimate of 2008 losses to $10.4 billion from $8.5 billion.

In an effort to ride out the crisis, made worse by the recent outbreak of the H1N1 flu virus, airlines have been looking to reduce costs elsewhere too.

Japan Airlines Corp <9205.T>, Asia's biggest carrier by revenues, said it planned to cut capacity on international routes by 10 percent in the year to March 2010.

Another major problem was rising fuel costs, a problem it would be irresponsible of governments not to act on, Bisignani said.

The risk that we have seen in recent weeks is that even the slightest glimmer of economic hope sends oil prices higher. Greedy speculation must not hold the global economy hostage.

At Monday's formal opening of the IATA conference, which ends on Tuesday, Malaysian Prime Minister Najib Razak drew laughter when he noted that he had walked over from an oil and gas conference being held next door.

I was discussing what should be the price of oil which seems to be something we are all grappling with, Najib said.

Prices for jet fuel in Singapore have jumped almost 60 percent since bottoming out around $46 a barrel in March.

IATA estimates the industry fuel bill will decline by $59 billion to $106 billion in 2009, or 25 percent of costs versus 31 percent in 2008.

Bisignani said the aviation industry's 2009 revenues would fall by $80 billion to $448 billion because of the global economic crisis.

(Additional reporting by Christina Pantin, Neil Chatterjee, Raju Gopalakrishnan, Jean Yoon, Soo Ai Peng; Writing by Lincoln Feast; Editing by Dhara Ranasinghe)

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