GENEVA -- Global airlines are expected to post a combined loss of $5.2 billion in 2008 on a "toxic" combination of high oil prices and falling demand, industry association International Air Transport Association (IATA) warned Wednesday.

The latest projection marked a cut from an August estimate of a $6.1-billion loss on spiking oil prices, but IATA Director General Giovanni Bisignani said that the situation "remains bleak."

"The toxic combination of high oil prices and falling demand continues to poison the industry's profitability," he said.

The group's latest projections assume an average crude oil price of $113 per barrel, and $140 for jet fuel.

The crude price is $40 more than the $73 per barrel average for 2007, pushing the industry fuel bill to a predicted $186 billion for the whole year, Bisignani said.

North American carriers are set to be the hardest hit with expected losses of $5 billion in 2008, IATA said.

European airlines are still seen in the black but only just, as profits tumble to $300 million from $2.1 billion in 2007. Similarly, Asia-Pacific carriers are expected to see profits shrink to $300 million from $900 million.

IATA also said that passenger demand growth fell to 1.9 percent in July, its lowest level in five years.

Asia-Pacific demand fell by 0.5 percent, "showing that economic weakness is spreading to previously robust economies."