10/14/2008

Analysts say deep cuts in capacity and expenses have positioned the airline industry to outperform the overall U.S. economy, despite the poor results expected this quarter. "What's interesting is that despite the subprime meltdown and subsequent economic weakness over the past one-and-a-half years, the airline industry has nonetheless been benefiting from pricing power, again, a consequence of aggressive capacity (cutting) over this decade," says Credit Suisse analyst Daniel McKenzie. But the Air Transport Association's chief economist warns that further cuts may be necessary if demand falls off due to recession fears.

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