Air France-KLM Group, British Airways Plc and Air Berlin Plc were among European airlines whose share-price estimates were slashed by Morgan Stanley analysts, who said rising fuel prices will hurt earnings.

"We believe the industry is in greater peril than is reflected in current valuations," London-based analyst Penelope Butcher said in a note to investors yesterday. "We don't see any value opportunities to chase at present," while there are unlikely to be large-scale mergers "given the need for capital preservation".

At least 24 airlines, including Luton, England-based Silverjet Plc, have failed this year as record fuel prices eat into earnings and a global tightening of credit causes slower economic growth, according to the International Air Transport Association. Crude-oil futures reached an all-time high of 139.89 dollar a barrel on the New York Mercantile Exchange on Monday.

The Morgan Stanley analysts cut their stock-price estimate on Air Berlin, Europe's third-biggest discount airline, to 2.01 euros from 4 euros. The target for Paris-based Air France, the region's biggest network carrier, was reduced to 16.47 euros from 17.40 euros.

The estimate for London-based British Airways was scaled back to 149 pence from 160 pence, while Luton-based EasyJet Plc's was slashed to 259 pence from 310 pence. The target for Barcelona, Spain-based low-cost carrier Vueling Airlines SA was cut to 3.90 euros from 5.5 euros.

EasyJet, Europe's second-biggest discount airline, said last Friday that it may close a base in Dortmund, Germany, as part of a capacity cutback in response to rising fuel costs. Larger competitor Ryanair Holdings Plc, said on June 3 that it will ground 20 aircraft during the winter schedule, compared with seven planes last year, the equivalent of 10 percent of total capacity.

Editor: Yan