ACE Aviation Holdings Inc.Montreal, Canada (Pink Sheets: ACEAF)

Airlines Battle High Fuel Costs, Weak Economy - Record fuel prices and a slowing US economy are forcing many carriers to trim capacity by grounding older planes that are less fuel-efficient and make other cuts. American Airlines plans to cut as much as 8 percent of its domestic capacity in fourth quarter 2008; United Airlines' parent company UAL is closing Ted, its low-cost carrier, and cutting 950 pilots. However, even as lower growth and profitability are expected in the North American market, airlines are generally adhering to fleet modernization plans to operate more fuel-efficient aircraft.

Airline Merger Makes Sense Amid High Oil Prices - A recent letter to the editor of The Wall Street Journal from the CEOs of Delta Air Lines and Northwest Airlines suggests that the proposed merger of the two companies would limit future capacity reductions in response to high oil prices. The $1 billion in cost savings and revenue gains created by a merger would help the new company cut flight frequency instead of destinations if fuel costs go higher, the CEOs claim. The letter also suggests that the cost savings from combining operations would help a merged company offset rising fuel prices better than either company could on its own.

Northwest CEO Urges Congress to Curb Oil Speculation - In testimony before the House Committee on Energy and Commerce, Northwest Airlines CEO said that increased oil speculation in the futures markets is contributing to the higher jet fuel prices that are hurting the airline industry. The CEO suggested that Congress ban pension funds from investing in energy commodities, and close the loopholes that permit institutional investors to engage in unregulated trading.