U.S. says war could hurt airline recovery prospects WASHINGTON(Reuters) =97 The government said Tuesday that any conflict in= Iraq=20 could seriously hurt prospects for near term U.S. airline industry=20 recovery. The Federal Aviation Administration's assessment, contained in a= =20 report released at its annual industry forecast conference, was more=20 understated than the alarming scenario presented by the industry last week.= =20 But the government research presaged more problems for airlines if costs=20 continue their sharp climb against weak revenues. Government and industry experts are particularly concerned about US Airways= =20 and United Airlines ,which are both in bankruptcy, and American Airlines,=20 which could seek Chapter 11 protection this year. The FAA said a war with=20 Iraq would pose one of the "greatest risks" to meeting the updated recovery= =20 targets forecast by the FAA, which include a 2.3% increase in domestic air= =20 traffic this year followed by a 4% jump in 2004. The FAA expects domestic=20 travel to return to the levels that preceded the Sept. 11 attacks in 2006.= =20 International traffic is forecast to rise by 2.1% this year and 3.4% next.= =20 Both categories experienced negative growth in 2002 when the industry lost= =20 more than $10.5 billion. Agency economists did not tie worsening industry financial problems to the= =20 length of any Iraq conflict. "For some period of time, it would reduce=20 passenger demand as well as drive operating costs higher. In its current=20 financial condition, this would be difficult for the U.S. commercial=20 aviation industry to absorb," the report said. The chief economic pressures= =20 would be any sharp drop in demand coupled with higher fuel prices and other= =20 expenses. Jet fuel prices have more than doubled in the past year, and=20 demand for overseas travel has softened more than 20% since early February.= =20 The leading association for the major U.S. airlines said last week that an= =20 Iraq war lasting 90 days could prompt an annual industry loss of $10.7=20 billion, more bankruptcies, and cost 70,000 jobs. Another concern of=20 regulators is the potential for dramatic industry consolidation if airline= =20 financial problems worsen. "While consolidation may improve the financial=20 health of individual carriers and the industry, the fear is that (it) could= =20 lessen competition in many markets," the report said. "Less competition=20 could mean higher fares and lower travel demand." In addition to the=20 uncertain outlook for United and US Airways, four smaller airlines have=20 gone out of business since the Sept. 11, 2001, attacks accelerated an=20 industry downturn into its worst-ever financial slide. Three struggling=20 airlines, Eastern, Midway and Pan American, ceased operations after the=20 1991 gulf war. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.thehummingbirdonline.com TnT Webdirectory: http://search.co.tt *********************************************************