Profits rising. Pricing power returning. Credit rating upgrades. Deal makers flying high. Can this be the airline industry investors periodically love and loathe? The International Air Transport Association (IATA) certainly thinks so. Most carriers are reporting healthy second-quarter profits — Delta led the parade with a ten-year high $467 million in the second quarter — so IATA has tripled its forecast for the industry’s 2010 profits to $8.9 billion. “The industry recovery has been stronger and faster than anyone predicted,” Giovanni Bisignani, IATA’s director general, told the press. Warning: Forecasting airline industry profits is no easy thing. At the end of the first quarter IATA predicted the industry would lose $2.8 billion this year. That was revised a few months later to a forecast that profits would total $2.5 billion by year-end. The new forecast of $8.9 billion is also subject to change. What we do know is that the industry lost almost $10 billion last year and $16 billion in 2008, after chalking up profits of almost $13 billion in 2007. That’s major profit turbulence. 

So far this year both demand for seats and for cargo space is up as the economic recovery, fragile and weak though it is, has businessmen traveling again and goods shipments rising. Business travel, of course, is the key to airline profits, since executive rear ends generally settle into profitable business- and first-class seats. Which is why the industry’s chiefs lose sleep after they hear talk of a double-dip recession that would ground business high flyers. For now, they are comforted by the fact that American consumers’ spending on travel is increasing at about twice the rate at which the overall economy is growing.