NEW YORK (

TheStreet

) -- Airline stocks are in the red as the Friday, as the market continues to grapple with the recent news on airline losses projected for next year.

Various airlines have been wallowing in the red ever since the International Air Transport Association (IATA) reported greater-than-previously-forecast losses for the airline industry on Tuesday.

JetBlue

(JBLU) - Get Report

stock has tumbled 3.6% to $5.40 in afternoon trading, while

Continental Airlines

(CAL) - Get Report

has fallen by 3.7% to $17.

Gol Linhas

(GOL) - Get Report

has plummeted 4.5% to $14 and

US Airways

(LCC)

has fallen by 2.6% to $4.50.

On December 15, the IATA forecast $5.6 billion of net losses for the global airline industry for 2010 versus its previous predictions of $3.8 billion in losses.

Still, the bigger picture provides us with a different view of the airline sectors' overall performance over the last few months. Since July 1, shares of United parent

TheStreet Recommends

UAL

( UAUA) have more than tripled. American Airlines parent

AMR

(AMR)

,

Delta Air Lines

(DAL) - Get Report

and Continental Airlines have nearly doubled. The rally has gained steam since Thanksgiving, with the six biggest carriers up 20% to 55%.

Standard & Poor's equity analyst Jim Corridore gave three reasons: November reports suggest that airline revenue stopped getting worse and even started to improve; the economy appears to be getting stronger, and airline finances are tied closely to economic growth; and airline shares often benefit from optimism that next year will be better, and this year there are good reasons to think that may be true.

The IATA maintains its forecast of a US$11 billion net loss for 2009, calling rising oil prices a "continuing disaster for the industry." Yet its forecast isn't all bad.

"The worst is likely behind us," said Giovanni Bisignani, IATA's Director General and CEO. "For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%."

One prime example of this is that the monstrous fuel costs predicted for next year will still be a massive improvement compared to 2008. The IATA says that the average oil price next year will be $75 a barrel, compared to $61.80 in 2009, or 26% of operating costs. But in 2008, fuel was 32% of operating costs.

-- Reported by Andrea Tse in New York

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