Airlines Hoping Fuller Planes Offset Rising Jet Fuel

Higher June traffic, strong demand and stagnant seat capacity should make it possible for aggressive airline price increases.


Airplanes are fuller than ever this summer, and that's the good news for many airlines. The bad news is that jet fuel prices are sharply higher than they were a year ago, with little relief expected soon.

How various carriers are doing will become clear starting July 19, when Southwest Airlines Inc. and AMR Corp. report second-quarter results.

Analysts polled by Thomson First Call forecast earnings, on average, of 26 cents a share for Southwest. The airline's load factor, or the ratio of plane seats containing paying passengers, rose in the second quarter to 78% from 72.5% a year ago.

AMR, parent company of American Airlines, said its load factor for the month of June rose to 85.4% from 82.8%, as it cut capacity.

Analysts polled by Thomson First Call forecast AMR earnings, on average, of $1.09 a share from revenue of $5.93 billion.

The air industry as a whole should produce second-quarter net income of $1.2 billion, according to Calyon Securities. Higher June traffic, strong demand and stagnant seat capacity should make it possible for aggressive airline price increases, according to Calyon analyst Ray Neidl.

Second-quarter growth in revenue per available seat mile, an industry benchmark, "should be the best in over a decade," Bear Stearns analyst wrote in an earnings preview.

Continental Airlines Inc. is scheduled to report July 20, with UAL Corp., US Airways Group, Frontier Airlines Inc. and Airtran Holdings Inc. expected to report the next day.

The Amex Airline Index slumped heavily from the end of March to mid-June, losing 18%, but has since recovered most of that loss.



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