=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2007/09/17/financial/= f101243D25.DTL --------------------------------------------------------------------- Monday, September 17, 2007 (AP) Sector Snap: Airline Shares Lose Ground (09-17) 10:12 PDT New York (AP) -- Airline shares slipped with the broader market Monday, as oil prices cre= pt back toward last week's record levels and Goldman Sachs warned rising fuel costs could hurt earnings. The Amex Airline Index lost 1 percent to 44.65. The Dow Jones industrial average, meanwhile, lost 74 points to 13,368.63. Traders are anxiously awaiting the Federal Reserve's decision Tuesday on interest rate policy, with Wall Street widely expecting a cut in the benchmark federal funds rate. That optimism drove oil futures higher on the New York Mercantile Exchange, where the price for a barrel of light, sweet crude for October delivery increased 52 cents to $79.62. Goldman Sachs on Friday boosted its oil price forecast to $80 and $90 per barrel for 2008 and 2009 respectively, up from the $68 it previously expected for both years. The investment bank also raised its refining cost estimates by $2 per barrel each year. "If the forecast proves correct it would imply a potentially severe cost and earnings headwind for airlines," said Robert Barry, one of the bank's airline analysts, in a note to investors Monday. Fuel represents one of the airlines' biggest costs. Barry said the oil estimates are expected even if the U.S. economy slows, a scenario some economists and investors fear is becoming more likely. "That means airlines could face higher oil prices in an environment where it is also becoming more difficult to raise fares as an offset," he wrote. The analyst said he remains "unenthusiastic about most airline equities" and has "little conviction recommending that investors buy U.S. airline equities." His top pick is Delta Air Lines Inc., which he rates "Buy," followed by "Neutral"-rated Northwest Airlines Corp. Delta shares fell 41 cents to $17.24. Northwest dipped 24 cents to $17.2= 3. Southwest Airlines Co. was the sector's only gainer. The carrier on Frid= ay apologized to a customer at the center of high-profile flap over her attire on a recent flight and said it was cutting its fares down to "'miniskirt' size" of $49 to $109 one-way. Southwest shares rose 17 cents to $14.43. The rest of the sector was down, led by United Airlines parent UAL Corp. It fell $1.33, or 2.9 percent, to $44.53. Among other decliners, AMR Corp., the parent of American Airlines, fell = 41 cents to $23.63; Continental Airlines Inc. lost 30 cents to $32.38; and US Airways Group Inc. fell 66 cents to $29.42. -------------------------------= --------------------------------------- Copyright 2007 AP <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".