PARIS (Reuters) – Airlines are at last beginning to fill vacant business-class seats in a sign that a slump in cross-border trade is easing, an industry body said yesterday.

Latest July statistics from the International Air Transport Association add to flickering signs of recovery in the economy but offer little relief for the battered finances of airlines themselves as average fares remain weak, the Geneva group said.

In July the number of first- or business-class travellers on international markets fell 14.1 percent from the same month last year, less than the 21.3 percent decline seen in June.

"Premium travel on international markets, which is mostly for business, is closely correlated to world trade which bottomed out in May and started to turn up in June," IATA said.

"This improvement in cross-border trade is boosting business travel but demand is still very weak compared to the recent past and there remains much excess capacity, producing intense competition."

IATA raised its forecast for total airline losses in 2009 by $2 billion to a record $11 billion.

Premium seats are the most lucrative sector for airlines. Many business people have downgraded to economy or shunned air travel during the economic crisis, prompting carriers such as Air France to try out new premium economy products.

The positive IATA traffic report underscored European data showing the euro zone's trade surplus grew more than expected in July.

Airlines have also individually been reporting slowing declines in their traffic in August.

Parcel giant and US economic bellwether FedEx said it detected a "modestly improving global economy". Weak demand and a dearth of trade finance had not only emptied business cabins but also severely depressed airlines' cargo operations.