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.
Traffic on American Airlines flights jumped 10 percent last month from May 2004, and the airline reported that its airplanes were fuller.
American Airlines passenger traffic is up for the quarter, rising about 7 percent higher than for the second quarter of 2004.
American Airlines reported that its traffic increased last month as airplane loads grew, while one industry analyst enlarged his projection of the airline's losses for 2005.