On July 5, 2005, about 1130 eastern daylight time, a Piper PA-25, N6289Z, was presumed substantially damaged following a forced landing into the Atlantic Ocean, near Cape May, New Jersey. The certificated commercial pilot was not injured. Visual meteorological conditions prevailed, and no flight plan was filed for the local banner tow flight, which departed Paramount Air Airport (JY04), Green Creek, New Jersey, about 1100, and was conducted under 14 CFR Part 91. According to the pilot, he performed a preflight inspection, fueled the airplane, departed the airport, and picked up the banner. He then proceeded southbound while climbing the airplane to 700 feet above ground level (agl). As he continued southbound, the airplane began to "lose altitude." The pilot attempted to correct for the altitude loss by applying full power, but the airplane continued to descend to 500 feet agl. The engine "did not seem to be putting out the power needed to maintain altitude." The airplane's descent subsequently ceased, and it flew normally for a time, with "plenty of extra power," so the pilot reduced engine power. Following the altitude excursion, the pilot was not alarmed because he often encountered downdrafts in that area. While turning northbound, in the vicinity of Cape May Point, the airplane again began to lose altitude. The pilot applied full power, which slowed the descent. He maintained 65 mph indicated airspeed, and slowed the airplane to about 57 mph, but the airplane continued to descend. The pilot decreased the airplane's pitch angle and increased the airspeed to 80 mph, then attempted to climb the airplane. Various combinations of airspeed and angle of attack were attempted, all to no avail. About 300 feet agl, the pilot applied carburetor heat, adjusted the mixture control, and changed the flap setting, all having no effect on the descent rate. About 200 feet agl, the pilot released the banner, and even with full power applied, the airplane continued in slow descent. Due to the number of persons on the beach, the pilot elected to ditch the airplane in the Atlantic Ocean. The airplane impacted the water "controllably," and in a slightly nose high attitude. The pilot noted that the loss of altitude during the flight was very gradual, and over a distance of 3/4 to 1 mile. The airplane subsequently sank into the Atlantic Ocean, and was not recovered. The weather reported at Cape May County Airport (WWD), Wildwood, New Jersey, at 1155, included winds from 160 degrees at 13 knots, gusting to 17 knots, clear skies, temperature 79 degrees Fahrenheit, dew point 69 degrees Fahrenheit, and an altimeter setting of 30.07 inches of mercury.