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Bloomberg) U.S. airlines may have to cut back on flying as the slowing economy erodes their ability to boost fares while they struggle with higher costs for jet fuel.
That squeeze “calls for contraction,” said Hunter Keay, an analyst at New York-based Wolfe Trahan & Co. A benchmark of fuel-refining expenses rose to record highs last week, adding to pressure on carriers to match Delta Air Lines Inc. (DAL) and Southwest Airlines Co. (LUV) in paring current capacity or future growth.
Consumer confidence tumbled this month to the lowest since 1980, stoking concern that Americans will curb spending. That gauge of public sentiment on Aug. 12 followed record swings in U.S. stocks as the Standard & Poor’s 500 Index whipsawed to gains or losses of at least 4.4 percent for four straight days.
“I don’t think airlines should view that nervousness as short term,” Keay said in an interview. “If executives are going to go out and assume high fuel prices are here to stay, then they should assume that fear and destruction of consumer wealth are here indefinitely as well.” ...........(more)
The complete piece is at:
http://www.bloomberg.com/news/2011-08-15/airlines-risk-deeper-seat-cuts-amid-u-s-wealth-destruction-.html