The world's airlines are expected to post losses totaling $11 billion this year as weak passenger traffic and cargo demand pressure revenue, the International Air Transport Association said on Tuesday.

The association previously projected losses of $9 billion due to rising fuel prices and weak revenue.

The Geneva-based trade group forecast industrywide losses of $3.8 billion in 2010.

The global economic storm may be abating, but airlines have not yet found safe harbor, IATA Director General and Chief Executive Giovanni Bisignani said in a statement.

IATA expects revenue to slump 15 percent in 2009, and Bisignani said the revenue projection was driving the trade group's lowered outlook. During a conference call, he said revenue would not return to 2008 levels until 2012 at the earliest.

After every crisis, we never see yields return to the starting point, he said during the call.

Bisignani said smaller- and medium-sized carriers have not had the access to debt markets that their larger peers enjoy, putting them in a more fragile condition. In coming months, the airline industry could see other bankruptcies, he said.

IATA also revised its loss estimates for 2008 to $16.8 billion from $10.4 billion to reflect accounting changes and restatements.

The bottom line of this crisis -- with combined 2008-9 losses at $27.8 billion -- is larger than the impact of 9/11, Bisignani said.

For 2009, IATA said it expects passenger traffic to fall 4 percent, compared with its June estimate of 8 percent. It sees cargo demand falling 14 percent.

The updated forecast assumes oil prices average $61 a barrel, up from $56 a barrel in the previous forecast.

Sentiment on airlines has improved recently as cost-cutting has helped soften the blow from weaker demand and some airlines have given signs that revenue trends may be poised to improve.

On Monday, Delta Air Lines Inc , the world's largest carrier, boosted its operating margin forecast for the third quarter, citing lower expected fuel costs. It also said revenue per available seat mile would show a smaller decline in the third quarter than in the second quarter.

(Reporting by John Crawley; additional reporting by Karen Jacobs and Deepa Seetharaman; Editing by Maureen Bavdek and John Wallace)