The US government said today any conflict in Iraq could seriously hurt prospects for the near-term recovery of the US airline industry.
The Federal Aviation Administration's assessment, contained in a report released at its annual industry forecast conference, was more understated than the alarming scenario presented by the industry last week.
But the government research predicted more problems for airlines if costs continue their sharp climb against weak revenues.
Government and industry experts are particularly concerned about US Airways and United Airlines, which are both in bankruptcy, and American Airlines, which could seek Chapter 11 protection this year.
The FAA said a war with Iraq would pose one of the "greatest risks" to meeting the updated recovery targets forecast by the FAA, which include a 2.3 per cent increase in domestic air traffic this year followed by a 4 per cent jump in 2004.
The FAA expects domestic travel to return to the levels that preceded the September 11th, 2001, hijack attacks in 2006. International traffic is forecast to rise by 2.1 per cent this year and 3.4 per cent next.
Both categories experienced negative growth in 2002 when the industry lost more than $10.5 billion.
Agency economists did not tie worsening industry financial problems to the length of any Iraq conflict.