The ominous news about the airline industry over the last two years has been nearly incessant. Despite a record decline in passenger numbers in 2009 and financial and labour trouble at some major carriers, good news is slowly beginning to trickle in.

Yes, there are losses galore. Japan Airlines is in bankruptcy, British Airways is trying to avert a crippling strike, and IATA reports that in 2009, the industry suffered the worst passenger decline in history. However, a recovery of sorts seems to be at hand.

The Middle East and Latin America show the most signs of progress and the Asia-Pacific region is slowly recovering from a drop in passenger demand. African carriers had an encouraging December despite steep declines early in 2009. Airlines in Europe and North America, though not showing net gains in passenger numbers over 2008, were encouraged by smaller declines in traffic. Several have reported a modest uptick in premium travelers most coveted by airlines.

In the U.S., American, United, U.S Airways, and Delta all reported losses for the last quarter of 2009 with Continental being the only large "legacy" carrier thus far to report a profit in the same period. Low-cost carriers Southwest, AirTran, JetBlue and Allegiant all reported profits for the quarter and in some cases eked out profits for the entire year. It's clear that the airlines with the lowest costs fared better. Airlines have cut operating expenses, added fees and reduced capacity over the last 18 months. The fact that the cost of fuel was much lower in the last three months of 2009 than it was over the same period in 2008 helped as well.

Airlines are responding to the positive trends. China Southern Airlines has placed an order for 20 Airbus A320 jets, predicting a profit for 2009 thanks to lower fuel prices. Australian low-cost carrier Jetstar has announced the creation of an international hub in Singapore, giving the airline access to Asian markets yet to be announced. Lufthansa is adding routes from Munich to Miami and is resuming flights from Düsseldorf to Toronto. The airline previously announced that it will begin flights to Iraq after a twenty-year absence. Air Canada will add seven U.S. cities to its schedule this spring in another sign of increasing passenger traffic.

Despite all the better news coming out of the industry, airlines remain cautious. The volatility of the industry to price hikes, disasters and other unforeseen events cannot be understated and could send any gains spiraling into negative territory before anyone has finished spelling the word recovery.