Airlines See Increase in 1Q Revenue

Travelers are boarding planes in increasing numbers and are paying more for tickets, boosting revenue at U.S. airlines.

But the Seattle-based company would have posted a profit of $2.8 million except for a charge to reflect the lower value of its aging fleet of MD-80s, which its airlines are dropping as they switch to an all-Boeing 737 fleet.

On that basis, Alaska easily beat the analysts' forecast of a loss of 56 cents per share. Ray Neidl, an analyst with Calyon Securities, said the operating profit plus a bullish outlook for the summer helped lift Alaska shares.

Revenue rose 14 percent to $735.4 million, helped by passenger traffic increases of 14.8 percent at Horizon and 4.7 percent at Alaska Airlines.

All three airlines reported strong traffic, and so did AMR Corp.'s American Airlines on Wednesday. That's despite 17 major fare increases since January 2005, according to Tom Parsons, who runs, a discount travel site. He said as long as airlines keep seeing customers lining up for flights, there will be no end to the hikes.

"We're going to see a record number of passengers this July, and the cheap seats just won't be there," he said.

Southwest shares fell 88 cents, or 5.1 percent, to close at $16.48 on the New York Stock Excxhange, while Continental shares dropped $1.18, or 4.5 percent, to $24.81 and shares of Alaska Air Group rose $1.65, or 4.7 percent, to $37.05.


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