Analysts have downgraded earnings forecasts for listed Chinese airlines after the United States terrorist attacks dampened the outlook for the international travel market and sent insurance premiums higher. This is despite a sharp drop in oil prices earlier this week which will give carriers relief from high fuel prices seen since 1999. Analysts said shrinking demand for travel and fears of a recession had outweighed the benefits from lower fuel prices. Goldman Sachs slashed its net profit forecasts this year for China Eastern Airlines by 66 per cent to 129 million yuan (about HK$120.87 million) and for China Southern Airlines by 50 per cent to 335.3 million. 'The cuts are largely based on more realistic expectations for fuel prices as well as worse-than-expected prospects for the cargo and international passenger divisions,' it said. China Eastern is more exposed to sluggishness in the international travel market as it sourced about 30 per cent of its first-half passenger revenues from international routes, compared with China Southern's 12 per cent. Cargo and mail accounted for 16.5 per cent of China Eastern's first-half turnover, compared with 8.5 per cent for China Southern. The Brent crude-oil price fell to about US$22.20 a barrel yesterday, down about 28 per cent from a peak of more than US$31 just after the attacks and lower than the pre-attacks level of about US$24. 'Lower oil prices will give a small bit of help to the industry,' said Credit Lyonnais Securities Asia analyst Jim Lam. The European brokerage has cut its forecast for China Southern's net profit this year by 15 per cent to 620 million yuan. It has lowered its forecast on next year's jet-fuel price in Singapore - an Asian benchmark - from US$32 a barrel to US$27. Its estimate for China's jet-fuel price next year has been lowered from US$43 a barrel to US$41. Jet fuel in China is controlled by a state monopoly and was about 41 per cent more expensive compared with international prices in the first half this year, industry executives said. They said industry watchdog Civil Aviation Administration of China (CAAC) and international insurers had not yet agreed on how much insurance premiums would be raised for the industry. The CAAC would not help the airlines bear this burden. The CAAC is trying to convince insurers not to insist that all flights in China - domestic and international - be subject to a war-risk premium of US$1.25 per head. Europe-based ABN Amro Asia has downgraded this year's forecast for listed Chinese airlines' earnings by 5 to 10 per cent and for next year's earnings by 14 per cent to 29 per cent.