Boeing forecasts more consolidation in the global aviation industry in the next 10 years. Chief Executive Officer Jim McNerney said restructuring of air carriers will be one of the industry's biggest challenges in the coming decade.

He predicted that smaller air carriers would combine with larger players, but mid-sized airlines would be caught out in the mergers and takeovers.

The forecast apparently supports plans by Qantas to open a new service based in Southeast Asia, which has been denounced by Qantas union.

The International Air Transport Association, in its September forecast, projected that profits for the global aviation industry would fall to $4.9 billion in 2012 with revenues of $632 billion and net margin of just 0.8 per cent.

IATA previously upped its industry profit expectations for 2011 to $6.9 billion from the $4 billion it forecast in June. Despite the higher expectation, IATA said profitability is still exceptionally weak at 1.2 per cent net margin given total revenue projection of $594 billion for the industry.

"Airlines are going to make a little more money in 2011 than we thought. That is good news. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement," IATA Director General and Chief Executive Officer Tony Tyler said in a statement.

"But we should keep the improvement in perspective. The $2.9 billion bottom line improvement is equal to about a half a per cent of revenue. And the margin is a paltry 1.2 per cent. Airlines are competing in a very tough environment. And 2012 will be even more difficult," Tyler added.

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