A look at recent airline industry earnings

The biggest U.S. airlines all reported earnings over the past two weeks. Here is a summary of the earnings and what they reveal about the state of the airline industry.

? July 18: AMR Corp., the parent of American Airlines, lost $241 million in the three months ended in June as it paid out big bucks to restructure under bankruptcy protection. But strip out those costs and American had its best results for a second quarter in 5 years. American and other airlines have been raising fares and charging fees for everything from bags to extra legroom. American is also cutting flights or flying smaller planes on routes with low passenger traffic. Excluding bankruptcy and other costs, AMR had a profit of $95 million. Revenue set a record at $6.46 billion.

? July 19: Southwest Airlines Co. said net income soared 42 percent as its revenue also set a record. Southwest's average one-way fare topped $150, up 5 percent from last summer. Plenty of passengers were willing to pay the higher prices as the peak vacation season began ? traffic measured in miles traveled also rose 5 percent. Oil prices dropped, so Southwest's jet fuel costs fell slightly to $3.22 per gallon. Fuel has become the biggest expense for airlines over the past few years, eclipsing labor costs.

? July 25: A wrong-way bet on fuel prices was the main reason Delta Air Lines had a loss in the second quarter. Like other airlines, Delta uses financial devices known as hedges to protect against a spike in oil prices. When oil dropped sharply instead during the second quarter, those hedges cost Delta $561 million. That offset a solid operating performance. Revenue rose 6 percent to $9.73 billion, and excluding special items Delta's profit topped Wall Street expectations.

? July 25: US Airways hit the airline jackpot in the second quarter ? higher fares plus lower fuel prices. Its net income tripled to $306 million. The bigger profit wasn't because US Airways carried a lot more passengers ? traffic rose just a half-percent. But passengers paid 7.4 percent more to fly compared to the same period a year ago. That operating performance may be overshadowed by US Airways' public campaign for a merger with American Airlines.

July 26: United Continental Holdings is a product of last decade's industry consolidation. Merging the operations of United Airlines and Continental isn't complete yet, and it hasn't been easy. United's second-quarter profit fell 37 percent because of merger costs. United's revenue per passenger trailed that of Delta, American and US Airways. Analysts expect the merger to pay off in the long run, but for now they're concerned about the stumbles.

Source: http://news.yahoo.com/look-recent-airline-industry-earnings-203046224--finance.html

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