$6.5 billion in losses seen for airline industry

(Reuters) - Calyon Securities's Ray Neidl widened his second-quarter and 2008 loss estimates for some large U.S. carriers, and forecast an industry-wide loss of about $6.5 billion for the year, saying fuel costs had increased faster than expected.

"Persistently ever higher fuel costs remain the industry's major threat at this time with economic softness, labor unrest and what seems to be government indifference over aviation infrastructure," Neidl said in a research note.

Neidl expects an industry-wide loss of about $800 million for the second quarter.

The analyst, who has a "neutral" rating on all the airline stocks that he covers, said though he expects the airlines to continue to take drastic actions, it was too early to determine if the planned capacity cuts for the slower post-summer travel season would be successful.

Though most stocks are already trading near bankruptcy levels, Neidl said they could still make it at least into 2009 without filing for bankruptcy.

"If oil prices stay high, we expect a vastly smaller industry for at least a few years until adjustments and restructuring can be completed, the analyst said.

(Reporting by Swagata Gupta in Bangalore; Editing by Amitha Rajan)