JPMorgan: US airlines set to lose $4-9 billion in 2008
14 Mar 2008
A JPMorgan research note has projected a full-year loss of $4-9 billion for US airlines in 2008.
Projecting continuing high oil prices and declining demand Morgan analyst Jamie Baker has warned, "We don't believe the industry can move quickly enough to put much of dent in forecasted losses."
According to Baker, there will likely be a 6-7% decline in demand resulting from a weak US economy, which JPMorgan believes is already in a recession.
"Even a best-ever recessionary demand scenario results in a $4 billion industry loss," Baker wrote. "And if demand trends mirror prior recessions, a $9 billion loss can't be ruled out."
According to Baker, collective fuel costs would be $25 billion higher than in 2002, "overwhelming the $7 billion in labour savings wrought by the Chapter 11 cycle."
He also said that among USA's ten largest carriers, only Southwest Airlines would be profitable in 2008.
Delta Air Lines and Northwest Airlines CEOs had already issued warnings earlier this week that fuel costs would impact the domestic aviation industry negatively.
.webp)
