The U.S. airline industry, battered severely in the last year by volatile fuel costs and an economic recession, may show signs of recovery when carriers begin reporting quarterly earnings next week, experts said on Wednesday.

Third-quarter results are likely to be mixed for the major airline companies like Delta Air Lines , AMR Corp and UAL Corp , according to estimates provided by Thomson Reuters I/B/E/S.

But analysts say the reports likely will include evidence that travel demand is finally picking up after a painful year for airlines. Southwest Airlines kicks off the airline earnings reports on October 15.

We're expecting losses from the big guys and profits from the smaller guys, said Helane Becker, airline analyst at Jesup & Lamont.

I would describe it as a quarter that kind of shows that we're at or near a bottom, she said. We're turning the corner. The fourth quarter could be better. And definitely 2010 should be a better year in general.

Consensus estimates from Thomson Reuters I/B/E/S show that Delta is expected to post a third-quarter loss of 7 cents per share on an operating basis. AMR is seen losing 86 cents per share. UAL is expected to lose $1.09 per share. Continental Airlines , however, was expected to see a profit of 2 cents per share.

The airline industry downsized in 2008 and 2009. Earlier this year, Delta and AMR Corp's American Airlines announced capacity and staffing cuts to help offset the weaker demand.

But in recent months airlines have said demand for travel -- especially business travel -- is slowly recovering. Still, any signs of recovery are tentative and some travel experts believe fare sales this fall and winter will reflect deep concern about upcoming ticket sales.

Obviously our concern is a double dip, but we think that September, October are generally very strong business travel months and we'd like to see that in the numbers, Becker said. And we'd like to hear (airlines) say that holiday bookings are strong.

Monthly data from major airlines reflects the steep capacity cuts in September, but it also shows full planes.

We continue to see positive revenue trends with strong close-in bookings and improving yields, said US Airways President Scott Kirby in a statement accompanying the carrier's September traffic report.

Morningstar equity analyst Basili Alukos said recent traffic data from the airlines has shown an upswing in revenue.

When you have a little bit of a revenue comeback that does huge things for profitability, Alukos said.

(Reporting by Kyle Peterson, editing by Matthew Lewis)

American Airlines