REFILE-UPDATE 1-Korean Air sees recovery, Delta signals improvem

(Refiles to correct spelling of Delta Air Lines in ninth paragraph) (Adds details, China Southern)

INCHEON, South Korea, Nov 5 - Heads of members of a major airline alliance including Korean Air and Delta Airlines expressed some optimism about the industry's recovery but noted uncertainties from the H1N1 flu virus and the overall economy.

Airlines around the world have been hit by soft travel demand and low fares after last year's crisis, but are seeing a stabilising trend.

Stronger airlines are set to benefit from the ongoing recovery by scooping up smaller rivals in trouble.

"We expect a significant recovery for (the rest of) this year and next year," said Cho Yang-ho, chief executive of South Korea's top airline Korean Air, adding that the recovering won and more stable oil prices were helping.

"Once things go down, they go up too...Asia has shown the fastest recovery in the world," Cho said.

But he warned that the spread of the H1N1 flu virus was adding uncertainty to the industry outlook.

When asked about its cargo business, ranked top worldwide, Cho said: "It keeps growing."

Cho and other airline executives were speaking to a news conference held in South Korea following a governing board meeting of the SkyTeam alliance.

"As we look at global airline booking trends, we have seen steady improvements since June of 2009," said Richard Anderson, chief executive of the world's biggest Delta Air Lines.

"The recovery is still difficult in the global economy and will not be rapid or smooth necessarily. But we are seeing positive improvements in loads, yields and business travellers."

Airlines saw demand suffer especially in the highly profitable business class segment this year as companies cut costs.

Anderson declined to elaborate when asked about Delta's approach to Japan Airlines (JAL), Asia's largest airline by revenue.

Financially troubled JAL has held separate talks about business ties and possible capital injections with AMR Corp's American Airlines and Delta.

Separately, the chairman of China Southern, China's top air carrier by fleet size, said he was confident about the Chinese airline market outlook.

Chairman Si Xianmin said China had seen healthy growth in passengers so far this year and that he was "confident on the prospect of the Chinese market."