"Some major U.S. carriers seen returning to black"

Tuesday, July 12, 2005

Some major carriers seen returning to black
Continental, Alaska Air expected to report profits in second quarter
The Associated Press


NEW YORK - A couple of major U.S. airlines may return to the black in the
second quarter after years of losses, catching up to their low-cost
competitors.

Analysts surveyed by Thomson Financial expect Continental Airlines Inc. and
Alaska Air Group Inc. to report a profit for the second quarter, ended June
30.

"We believe many of our companies will report slight earnings surprises in
the second quarter," Lehman Brothers said in a research note. Lehman seeks
investment-banking business with airlines.

Some analysts even say the world's largest airline, AMR Corp.'s American
Airlines, may post both a net profit and operating profit for the first time
in more than four years. American reported operating losses for the past 17
quarters, and only reported a net profit in the second quarter of last year
because of restructuring gains.

U.S. airlines have reported strong traffic for the past three months, and
have been flying fuller airplanes than last year. That's brought in more
revenue for the airlines, which continue to struggle with heavy fuel costs.

Further, airlines have managed to boost fares here and there because of the
stronger demand, though some attempts to hike prices in the past few weeks
have failed.

Continental said earlier this month that it is selling tickets at higher
fares.

In light of stronger traffic and revenue, some analysts have become more
optimistic recently about airlines' fortunes.

Goldman Sachs last week boosted its forecast for American's second-quarter
earnings to 20 cents a share from a prior forecast of 5 cents. While most
analysts still think the airline remained in the red during the second
quarter, some speculate American might join the ranks of the profitable,
comprised almost entirely of low-cost carriers and regional airlines.

Still, Goldman said consistent profit isn't likely for the airline industry
because oil costs more than $50 a barrel. And analysts expect Delta Air
Lines Inc. and Northwest Airlines Corp. to post deep losses again in the
second quarter.


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dcfp/dcboard.php


*****************************************