Questions linger on air industry demand

Investors have been hammering airline stocks, anxious about possible weakness in domestic travel.
But analysts disagree on how much a cooling U.S. market would hurt the industry. Some say it could imperil expected 2008 earnings; others say carriers could overcome it due to continued strength in overseas travel. One analyst thinks the premise itself may be faulty, and the domestic market seems to be holding up okay.

The result of the debate was a 3.6 percent slump in just two days last week for the Amex Airline Index, which tracks 11 network, low-cost and regional carriers. Among the hardest hit were Continental Airlines Inc. and American Airlines’ parent, AMR Corp. Both companies last week reported their first first-quarter profits in years.

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