Wednesday, July 19, 2006

Profits expected for U.S. airlines

An article from the Dallas Morning News, republished on the Airport Business news website tells us that the combination of higher fares and fuller airplanes is expected to result in profitable quarterly earnings reports from a number of U.S. airlines.

Given the recent skyrocketing of fuel prices, this is particularly good news.
"June quarter results for the U.S. airline industry are expected to be strong," Merrill Lynch analyst Michael Linenberg said in a report Friday, "and we think September's results could be even better."

Southwest Airlines Co. and AMR Corp., parent of American Airlines Inc., both are expected to report higher profits Wednesday when they kick off the earnings season for airlines.

Dallas-based Southwest is expected to report net income of 26 cents per share, or about $209 million, according to a consensus of industry analysts surveyed by Thomson Financial. In second quarter 2005, Southwest earned 18 cents per share, or $144 million.

AMR is projected to post a profit of $1.14 per share, or about $215 million. The Fort Worth-based carrier earned 30 cents, or $58 million, in the 2005 quarter, only the third time since the start of 2001 that the company had reported a quarterly profit.

On Thursday, Continental Airlines Inc. is expected to report net income of $1.90 a share, or about $167 million. A year earlier, it earned $1.26 a share, or $100 million. Excluding a special one-time item a year ago, Continental earned 69 cents a share or $53 million.
Northwest and Delta, both operating under bankruptcy protection at present, are expected to report losses; but they are expected to be the exceptions.
One can look to UAL Corp., parent of United Airlines Inc., as an example of the improved fortunes for major airlines. UAL is expected to post a profit of about 46 cents a share, or about $45 million.

That's not much for what is traditionally one of the best, busiest quarters of the year. But it's a significant improvement for the nation's second-largest carrier, which lost more than $3 billion in the second quarters from 2001 to 2005, an average of over $600 million per period.

In fact, it will mark UAL's first real profit in any quarter since second quarter 2000, if one excludes first quarter 2006 when a write-off of nearly $23 billion in liabilities was booked as income as UAL emerged from bankruptcy.

The star of this round of earnings may be US Airways Group Inc., which combined last year with America West Holdings Corp. Analysts expect the carrier to report earnings of $3.31 a share, or about $285 million.
Source: U.S. Airlines Expected to Show Profit for First Time in Years - Airport Business

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