As airlines cut costs and boost fuel surcharges in their battle against record high oil prices, the industry's trade group said today it was planning to revise upwards its global loss predictions.

The Geneva-based International Air Transport Association (IATA) said it was revising a May forecast that predicted airlines would lose US$6 billion ($8.8 billion) in 2005.

"By maybe mid-September we will have a new forecast," said IATA spokesman Anthony Concil.

IATA had assumed Brent crude oil prices would average US$47 per barrel, a level that has shot to US$54 so far this year.

"Every US$1 rise adds US$1 billion to the costs of the industry," IATA's Concil said.

Making matters worse, hedging levels have fallen, leaving airlines more exposed than in 2004 when a rise in crude prices also battered the industry and led to losses of US$4.8 billion.

Airlines spent US$63 billion on fuel last year, up from US$44 billion in 2003, IATA data show.

Current oil prices suggest IATA's forecast of fuel costs over US$80 billion this year could now approach US$90 billion, more than twice what airlines spent on fuel just two years ago.

The positive news for airlines is that traffic has stayed high despite carriers imposing fuel surcharges on passengers.

Those surcharges, combined with cost cutting, has helped airlines cope.

"High load factors and fuel surcharges will prevent the full impact of fuel hitting the bottom line," IATA's Concil said. "But it's still an absolutely traumatic time for the industry."

Fuel is the highest cost for airlines after labour, and hedging practices vary widely.

Low-fare carriers Ryanair and easyJet are among those that have so far refused to impose fuel surcharges, while others have raised them several times over the last year and a half.

British Airways in June raised its surcharge on long-haul tickets sold and issued in Britain to £24 ($63.02) for each flight, having first introduced a surcharge of £2.50 pounds in May 2004.

Concil said IATA did not have comprehensive data on fuel hedging by its 265 member airlines but said anecdotal evidence suggested a level of about 20 per cent, down from 40 per cent just a year earlier.

Oil rushed toward record highs above US$70 on Wednesday as dealers feared a sharp squeeze on fuel supplies after Hurricane Katrina shut down vital US Gulf Coast refineries and production platforms.