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We have seen the increase in short interest in Cathay Pacific (OTCPK:CPCAY), American Airlines (AMR), and British Airways (OTC:BAIRY) over the past six months. Northwest Airlines (NWA), a US Small Cap company, has also seen a significant rise in the percentage of its Market Cap on Loan (%MCOL), from 3% on May 21st, to 5% today. This is juxtaposed with a drop in share price - from 9.3USD on May 15th, to 1USD today, showing that although profitable trades will no doubt be made, investors perhaps increased their positions 6 days too late (please see graph; click to enlarge).

However, Utilisation is at 20%, so there is still 80% of the supply left to borrow should short sellers think that the price will drop further. For those who disagree, there are 8 Days to Cover. 25% of the Market Cap is Lendable. The average Utilisation for the rest of the US Small Caps is 18%, and for the rest of the North America Transportation it is 13%.
Source: Another Day, Another Airline