American Airlines Traffic Up Sharply

American Airlines experienced strong growth in passenger traffic last month, and some analysts are predicting that the company will report a small profit for the second quarter.

Fort Worth-based American, the world's largest airline, said Tuesday that passenger traffic rose 8 percent during June, compared with the same month last year. Although much of the growth was in international markets, domestic traffic grew by 5 percent as well.

Demand for domestic travel had been flat for some time.

The rise in demand outpaced the airline's growth in flights, which increased by just 3 percent. That meant airplanes were flying more full. Average passenger loads grew by 4 percentage points, with planes flying 83 percent full during the month.

The improved revenue picture has provided a bright spot for American and other airlines as they continue to cope with the heavy cost of jet fuel. Oil prices temporarily topped $60 per barrel again Tuesday.

Last month, American executives told the Securities and Exchange Commission in a filing that second-quarter revenue will be higher than initially expected.

"Coupled with a slight decline in nonoperating expenses and a slightly worsened fuel outlook, a smallish second-quarter profit is to be expected, in our view," Jamie Baker, airline analyst for J.P. Morgan Securities, said in a recent report to investors.

The airline is expected to report its earnings July 20.

Other analysts are still expecting a small loss for the quarter, which is typically one of the strongest periods of the year for the airlines. A survey of analysts by First Call/Thompson Financial showed expectations ranging from a profit of 31 cents per share to a loss of $1.15 per share.

Last year, American reported a $6 million profit for the second quarter. The airline lost $761 million for the year.

Most analysts continue to predict a substantial loss for 2005.

American Eagle, the regional affiliate of American Airlines, reported a 29 percent increase in passenger traffic. Eagle has been growing rapidly as the airline adds regional jets to its fleet.

American's healthy report came soon after Houston-based Continental Airlines said its passenger revenue grew as much as 7 percent during the month.

Continental is the only major airline that reports its revenue monthly, and its results are considered an industry bellwether.

AMR's stock (ticker: AMR) slipped 1 cent Tuesday, closing at $12.05 per share.