Airlines give upbeat view of revenue trends

Published on NewsOK Modified: July 9, 2014 at 6:26 pm •  Published: July 9, 2014
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Three of the biggest U.S. airlines are giving upbeat signals about their business as the peak summer travel season kicks into high gear.

American, United and Southwest indicated that a key revenue figure was higher than in the same period last year, and American also raised its forecast for profit margin in the second quarter.

Shares of airline stocks rose.

Since a series of big mergers that started in 2008, airlines have kept a lid on flights, which helps keeps fares high enough to overcome higher fuel prices. Of the four biggest U.S. airline companies, only United lost money in the first quarter, and analysts expect all of them to be in the black for the April-to-June quarter.

On Wednesday, American Airlines Group Inc. said that passenger revenue for every seat flown one mile would be 5.5 percent to 6.5 percent higher in the second quarter than in the same period last year. That's an important statistic, and it rises when airlines fill more seats and passengers pay higher average fares.

The company raised its profit-margin forecast for the quarter to between 12 percent and 13 percent, up from 10 to 12 percent. Cowen and Co. analyst Helane Becker said the new margin forecast "provides further evidence that (the second quarter) was a very strong quarter for the airlines."

American also said that it expects to post non-cash charges of up to $630 million in the second quarter to cover the tax effects of selling fuel-hedging contracts and its bankruptcy reorganization, which ended in December with the merger with US Airways.