Oil spike rocks airlines

By Daryl Loo and Tim Hepher

SINGAPORE/PARIS (Reuters) - Airlines around the world braced for slower growth, tighter earnings and deeper cost cutting due to surging fuel prices on Thursday and Air France-KLM warned of lower profits.

Oil's early spike to a record above $135 a barrel battered some airline shares, although some top U.S. carriers' shares saw a slight rebound as NYMEX crude retreated from session highs and settled at just above $130.

Shares in AMR, parent of American Airlines -- which saw its shares fall 25 percent on Wednesday when the company announced its sharpest cutbacks since after the air attacks of September 11, 2001 -- recovered slightly on Thursday and ended up about 5.5 percent.

Shares of Air France-KLM, however, fell more than 10 percent after Chief Executive Jean-Cyril Spinetta warned the airline would have to expect a 1.1 billion euro (874 million pound) rise in fuel costs, squeezing profits this year and forcing it to find 150 million euros in savings.

It now expects an operating profit "in the region of 1 billion euros," Spinetta said, which would mean a fall of 30 percent from the year that ended in March.

"The current year is set to be challenging, with the oil price and the global economy creating significant uncertainty," Spinetta said.

Oil prices have surged 170 percent since the start of 2007 and eight small airlines have entered bankruptcy or stopped operating in the past five months, including U.S.-based transatlantic all-business carrier Eos and budget airline Aloha Airlines.

On Thursday, U.S. regional carrier Mesa Air Group, warned that it might also have to file for Chapter 11 bankruptcy protection, sending its shares down 15.8 percent to 48 cents.