S&P to review 10 U.S. airlines

Standard & Poor's said it will review its rating outlooks on the 10 U.S. airlines it rates, given cost pressures of rapidly increasing fuel prices and a weaker domestic economy.

Currently, three of those airlines have positive outlooks, six have stable outlooks and one has a negative outlook, the agency said, adding that its positive outlooks on ratings on AMR Corp. (B/positive/B-2), Delta Air Lines Inc. (B/positive) and US Airways Group Inc. (B-/positive) are at particular risk of revision, given the dim prospect for credit improvement over the near term.

The agency said that it expects to complete this review by the end of March.

"The rapid increase in jet fuel prices will add substantially to airline costs at a time when a weakening U.S. economy will make it more difficult to offset those costs with higher fares," said S&P credit analyst Philip Baggaley.

The agency noted that media reports quote Northwest Airlines Corp. (B+/stable) CEO Douglas Steenland as telling employees that oil priced at $105 per barrel is a "serious budget-buster," and that if the price remains over $100 this year, it will cost Northwest $1.7 billion more than budgeted.

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