<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 9, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US carriers taking off again - or are they?
Lower passenger traffic declines in March point to demand stabilisation
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(ATLANTA) AMR Corp's American Airlines and UAL Corp's United Airlines pared declines in traffic in March, suggesting that the industry's slump in travel may be easing.
Passenger traffic on the six biggest US carriers fell 11 per cent from a year earlier, less than February's 11.4 per cent, according to data compiled by Bloomberg. American, United and Continental Airlines Inc had smaller declines than in the previous month, while Delta Air Lines Inc had a larger drop.
The results hint at stabilisation in demand after the recession crimped business and leisure trips. As more people resume flying, carriers would regain the ability to raise fares after slashing prices to help fill seats.
'There might be some early signs that things are improving,' said Matthew Jacob, an analyst at Majestic Research in New York.
Investors also are signalling optimism about the industry, sending the Bloomberg US Airlines Index of 13 carriers up 50 per cent from a low on March 5. That's more than twice the gain in the S&P 500.
'A sentiment rebound is likely to drive shares higher in the near term,' William Greene, a Morgan Stanley analyst in New York, wrote in a note to investors on Tuesday before the index tumbled 4.7 per cent along with broader market gauges.
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</TD></TR></TBODY></TABLE>Delta, the world's largest carrier, said March traffic fell 13.8 per cent on a plunge in overseas travel, its worst result in more than a year and deeper than February's 8.8 per cent drop. Southwest Airlines Co, the biggest discounter, had the best results, with a decline of less than one per cent. It flies only in domestic markets.
American is the second- largest US carrier, followed by United, Continental, Southwest and US Airways Group Inc. Their March results marked the eighth straight month of lower traffic compared with a year earlier.
The prospect of a bottom in the slump isn't showing up yet in revenue for each seat flown a mile, an industry benchmark for fares and travel. Continental and US Airways each posted declines in so-called unit revenue of more than 17 per cent.
'The traffic numbers do show there is a willingness to travel but, unfortunately for the airlines, they have to really push prices down to get tickets sold,' Mr Jacob said.
Airlines' traffic results might have looked better in comparison with 2008 if not for the early timing of Easter, which boosted travel in March last year rather than April, when the holiday usually occurs.
Adjusting for Easter, March traffic dropped about 8 per cent, suggesting demand 'may have stabilised', Michael Derchin, an analyst at FTN Midwest Research Securities in New York, said on Tuesday in a note. 'March was a tough month but likely to mark the trough in this cycle.'
The biggest US airlines have chopped seating capacity by more than 10 per cent since the start of 2008 by parking more than 500 jets. They also have cut 29,000 jobs. -- Bloomberg
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US carriers taking off again - or are they?
Lower passenger traffic declines in March point to demand stabilisation
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(ATLANTA) AMR Corp's American Airlines and UAL Corp's United Airlines pared declines in traffic in March, suggesting that the industry's slump in travel may be easing.
Passenger traffic on the six biggest US carriers fell 11 per cent from a year earlier, less than February's 11.4 per cent, according to data compiled by Bloomberg. American, United and Continental Airlines Inc had smaller declines than in the previous month, while Delta Air Lines Inc had a larger drop.
The results hint at stabilisation in demand after the recession crimped business and leisure trips. As more people resume flying, carriers would regain the ability to raise fares after slashing prices to help fill seats.
'There might be some early signs that things are improving,' said Matthew Jacob, an analyst at Majestic Research in New York.
Investors also are signalling optimism about the industry, sending the Bloomberg US Airlines Index of 13 carriers up 50 per cent from a low on March 5. That's more than twice the gain in the S&P 500.
'A sentiment rebound is likely to drive shares higher in the near term,' William Greene, a Morgan Stanley analyst in New York, wrote in a note to investors on Tuesday before the index tumbled 4.7 per cent along with broader market gauges.
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American is the second- largest US carrier, followed by United, Continental, Southwest and US Airways Group Inc. Their March results marked the eighth straight month of lower traffic compared with a year earlier.
The prospect of a bottom in the slump isn't showing up yet in revenue for each seat flown a mile, an industry benchmark for fares and travel. Continental and US Airways each posted declines in so-called unit revenue of more than 17 per cent.
'The traffic numbers do show there is a willingness to travel but, unfortunately for the airlines, they have to really push prices down to get tickets sold,' Mr Jacob said.
Airlines' traffic results might have looked better in comparison with 2008 if not for the early timing of Easter, which boosted travel in March last year rather than April, when the holiday usually occurs.
Adjusting for Easter, March traffic dropped about 8 per cent, suggesting demand 'may have stabilised', Michael Derchin, an analyst at FTN Midwest Research Securities in New York, said on Tuesday in a note. 'March was a tough month but likely to mark the trough in this cycle.'
The biggest US airlines have chopped seating capacity by more than 10 per cent since the start of 2008 by parking more than 500 jets. They also have cut 29,000 jobs. -- Bloomberg
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