SINGAPORE – Airlines will earn $4.1 billion in 2012, $1.1 billion more than last estimated, as capacity curbs and mergers help boost fares amid high fuel prices and sluggish demand, the International Air Transport Association said.

Net income will be equal to 0.6 percent of sales, better than the 0.5 percent predicted in June, according to IATA, whose members account for 84 percent of air traffic. Profit will still be less than half the $8.4 billion achieved in 2011, it said.

IATA raised its forecast as carriers in Asia and the U.S. posted improved numbers in the three months through June, with Singapore Airlines increasing net income for the first time in seven quarters and Delta Air Lines and US Airways Group beating analyst estimates. Europe is the only region bucking the trend, with a loss of $1.2 billion forecast for the year, $100 million worse than previously predicted.

“The industry has re-shaped itself to cope by investing in new fleets, adopting more efficient processes, carefully managing capacity and consolidating,” IATA Chief Executive Officer Tony Tyler said at a press briefing in Singapore. “The industry’s profitability still balances on a knife-edge, with profit margins that do not cover the cost of capital.”

Carriers have been cautious in adding seating, with traffic increasing by 1.4 percentage points ahead of capacity over the first eight months, IATA said.

Improved asset utilization has helped bolster yields, a measure of fares, though tight corporate budgets mean business travel is becoming more price sensitive, encouraging “a shift away from the premium cabin back towards economy,” IATA Chief Economist Brian Pearce said at the briefing. Premium traffic fell 0.5 percent in July as economy travel increased 3 percent.

The trade group expects carriers’ earnings to increase to $7.5 billion next year, representing a 1.1 percent margin on sales of $660 billion.