The Dismal Equation, continued

Airlines lead off their second quarter earnings, or rather losses, this week, with American Airlines first up, or down, as the case may be. American's prospects are, in a word, lousy. Its revenue is likely to have slumped by more than 20% or by some $1.3 billion, a rate that outpaces the serious cutbacks American made in its capacity since last year's second quarter.
There's the rub: no matter how steeply they cut back their capacity, the airlines continue to suffer even steeper revenue declines. May revenues for the major US carriers slumped 18%, and at American, summer bookings are behind last year's. The big papers - The New York Times and The Wall Street Journal - both see a possible liquidity crisis. We did, too.