Airline stocks have gotten a boost recently from news that revenues are about to jump and from ‘Buy’ ratings on several airlines from Deutsche Bank. Continental Airlines, Inc. (NYSE: CAL), Delta Air Lines Inc. (NYSE: DAL), United Air Lines Corp. (NASDAQ: UAUA), and AMR Corp. (NYSE: AMR), parent of American Airlines, have risen steadily since the beginning of the year and their improved outlook gave rise to the new ratings.

The International Air Transport Association reported today that international air passenger traffic rose 11.7% in May and that international freight traffic jumped 34.3% compared with May 2009. Both figures are higher than pre-recession levels, with passenger traffic 1% higher and freight traffic 6% higher. The report only includes international traffic, so carriers such as Southwest Airlines Co.

(NYSE: LUV) and Alaska Air Group, Inc. (NYSE: ALK) with no or limited international traffic don’t figure much into the numbers.

IATA also noted that the airlines have put more planes into service in May, putting more pressure on load factors. Capacity increased by 4.8% while passenger load factor was just 76%. Aircraft utilization remains below pre-recession levels for passenger planes.

Freight capacity grew by 12.3%, and load factors reached a record 55.7%.

The IATA said that airlines are expected to show a profit of $2.5 billion in 2010, much better than the 2009 loss of $9.9 billion. That represents a margin of just 0.5%, but it’s a start for an industry that has suffered mightily over the past couple of years.

Good news aside, airline stocks have been hit hard today on news of the slowing global economic recovery. The slowing growth, particularly from China, could point to a drop in manufacturing and a concomitant drop in air freight shipments.

Chinese carriers like China Eastern Airlines Corp. (NYSE: CEA) and China Southern Airlines Co. (NYSE: ZNH) are down nearly 7% and 6%, respectively, while US carriers are down about 3%-4%.

The airlines face many trials if they are going to reach their expected profitability this year. They need to control costs and they must match capacity with demand much more closely. Neither of these is easy, and the shifting sands of the economic recovery make them even harder.