As the price of fuel continues to increase, the prospects for the country's weaker airlines dim accordingly. According to a recent report from Merrill Lynch, every $1 increase in the price of crude oil translates into a $450 million decrease in the airline industry's pretax profits. Assuming crude prices average $51 per barrel during 2005, Merrill predicts a $5 billion loss for the year. In connection with the fuel-related bad news, and other industry problems, we reported last week on grim forecasts from Delta and Continental, the former predictable, the latter surprising. The latest surprise is American, which had its debt outlook lowered from "stable" to "negative" by Chicago-based Fitch Ratings. American chief Gerard Arpey warned that no relief was in sight: "With the cost of oil at these levels, fares should be rising much faster than they are and capacity should be coming out of the market." American's problems are by no means the worst. In a MarketWatch interview, Calyon Securities' airline analyst Ray Neidl ranked the 4 legacy carriers not already in Chapter 11 according to their financial health, from best to worst: American, Northwest, Delta, Continental. Absent a decrease in fuel prices and an increase in ticket prices, Neidl expects 1 or more liquidations by year's end. Lastly, and more of a novelty item than a real concern to Crier readers, the operator of the Queen Mary luxury liner, permanently docked in Long Beach harbor as a tourist attraction, has declared Chapter 11. At issue: $3.4 million in back rent the city of Long Beach claims it is owed. __________________________________ Do you Yahoo!? Yahoo! Small Business - Try our new resources site! http://smallbusiness.yahoo.com/resources/