High passenger loads lift airlines
Crowded planes helped three of the nation’s major airlines post second-quarter profits Wednesday, but high fuel prices limited the gains as industry executives fret over what will happen if the prices remain high going into the fall.
American Airlines, the nation’s biggest carrier, saw its profit rise but still fell short of Wall Street’s expectations. Parent company AMR Inc. blamed summer storms that caused flight cancellations and delays.
Delta Air Lines Inc. broke into the black two months after emerging from Bankruptcy Court protection with a lower cost structure. And Southwest Airlines Co. reported its 65th straight profitable quarter while earning 17% less than a year ago.
All three reported heavy passenger loads. American’s planes flew with a second-quarter record 83.6% of seats filled, partly because cancellations forced passengers onto fewer flights.
Chairman and Chief Executive Gerard Arpey said third-quarter bookings were running slightly ahead of last year’s pace. American is trying to sell fewer discounted tickets far in advance, hoping to get higher prices closer to the departure date, which he said worked well over the summer.
Southwest said it expected heavy traffic in July and early August, but CEO Gary C. Kelly said he was “a little concerned when we get to the second half of August ... knowing it’s been a rocky year.” He said his airline had been fooled when ticket demand softened this spring and didn’t want to repeat the mistake.
Delta executives were the most bullish, saying advance bookings looked solid.
AMR earned $317 million, or $1.08 a share, in the quarter, up from $291 million, or $1.14, a year earlier. Analysts surveyed by Thomson Financial had expected $1.19 a share.
Revenue fell 1.6% to $5.87 billion. AMR said it lost $50 million in revenue, incurred higher costs and dropped 12 cents a share in earnings because of weather-related cancellations.
Shares of Fort Worth-based AMR fell 48 cents Wednesday to $27.45.
Atlanta-based Delta cut billions in costs before emerging from bankruptcy protection in April. It earned $274 million, or 70 cents a share, in the second quarter when one-time items related to the bankruptcy case were excluded. That topped analysts’ forecast of an adjusted profit of 59 cents a share. A year earlier, it reported a loss of $2.21 billion. Revenue rose 5.5% to $5 billion from $4.74 billion.
Delta’s stock price rose 18 cents to $21.37.
Southwest earned $278 million, or 36 cents a share, down from $333 million, or 40 cents, a year earlier. Revenue rose to $2.58 billion from $2.45 billion a year ago.
But its results still topped Wall Street expectations and its shares rose 13 cents to $15.72.
Southwest’s revenue as a ratio of capacity -- a closely watched statistic in the airline industry -- fell 4% in the second quarter, however.
Southwest is cutting costs. This week it delayed delivery of some new jets and offered buyouts to 8,700 employees -- one-fourth of its workforce.
