From JP Morgan’s Jamie Baker in his research note this morning in which he downgraded Continental, Delta, Alaska, American, Northwest, US Airways and United Airlines: “Even a best-ever recessionary demand scenario [in 2008] results in a $4 billion industry loss.”

“And if demand trends mirror prior recessions, a $9 billion loss can’t be ruled out,” he added. “In that scenario, cash becomes scarce for many.”

He added,

“It’s Just Math. Industry fuel likely to be some $25 billion higher than 2002, overwhelming the $7 billion in labor savings wrought by the Ch.11 cycle. Consolidation may help longer-term assuming labor doesn’t intercept most of the benefit, but getting there may prove scary. Aggressive 2H capacity cuts may offset part of the expected pain, though we don’t believe the industry can move quickly enough to put much of a dent in forecasted losses.”

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