Competitive carriers 'will survive downturn'

Only the most competitive airlines can expect to survive the current turmoil in the airline industry, one leading analyst has claimed.

Davy Stockbrokers said that Air France, Lufthansa, easyJet and Ryanair are among the carriers best placed to weather the slowdown in the sector, which has largely arisen from surging fuel costs.

"The current oil-price-driven crisis could well be the worst to hit the airline industry," Davy analyst Stephen Furlong said in a note to investors. "We view the long-term winners as the stronger airlines."

He argued that such airlines would be at least partly shielded by their ready cash-flow and low operating costs, but he stressed that carriers such as Air Berlin and Clickair were more vulnerable.

"We would expect large-scale cutbacks, with weaker players having to restructure, merge or disappear," Furlong continued, adding that stronger airlines could be expected to capitalise on any bankruptcies.

The International Air Transport Association recently warned that the airline industry is struggling for survival and faces $99 billion (£50 billion) in extra costs over the next year.

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