Aviation industry estimates slashed

Air France-KLM Group, British Airways Plc and Air Berlin Plc were among European airlines whose share-price estimates were slashed by Morgan Stanley analysts, who said rising fuel prices will hurt earnings.

"We believe the industry is in greater peril than is reflected in current valuations," London-based analyst Penelope Butcher said in a note to investors yesterday. "We don't see any value opportunities to chase at present," while there are unlikely to be large-scale mergers "given the need for capital preservation".

At least 24 airlines, including Luton, England-based Silverjet Plc, have failed this year as record fuel prices eat into earnings and a global tightening of credit causes slower economic growth, according to the International Air Transport Association. Crude-oil futures reached an all-time high of $139.89 a barrel on the New York Mercantile Exchange on Monday.