• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Continental, American Have Report Strong July Revenue

Posted on: Wednesday, 3 August 2005, 21:00 CDT

Aug. 3--Better-than-expected July revenue for one airline and strong traffic for American Airlines Inc. both failed Tuesday to divert investor attention away from higher oil prices and bankruptcy fears.

Crude oil futures hit a record $61.89 per barrel for September delivery, and published reports indicated that Delta Air Lines Inc. and Northwest Airlines Inc. were edging closer to seeking bankruptcy protection.

Those events overshadowed Houston-based Continental Airlines revenue figures released late Monday. Its revenue per seat mile flown in July rose between 4.5 percent and 5.5 percent, ahead of some estimates from Wall Street analysts who had predicted last year's strong July would prove difficult to beat for major carriers.

Continental's performance was more impressive in light of its adding 8.5 percent in overall capacity, meaning it had more seats to fill in the month than last year.

Average Continental fares likely rose as much as 14 percent over last July, said analyst Jamie Baker of JPMorgan Chase in a note to investors Tuesday, but he didn't expect investors to react as strongly to the positive figures as they had to previous reports this year.

Fort Worth-based American showed very strong traffic for July, with revenue passenger miles up 8.1 percent over last year. A revenue passenger mile is one person flown one mile.

American flew a schedule that was only 3 percent larger than last July's, and the 8 percent surge in traffic meant that its load factor -- a measure of paying passengers on board -- rose 4.1 percentage points to 85.1 percent for the month.

The world's largest carrier continued to see brisk sales for its international flights, where traffic rose 11.5 percent over last July. For its domestic flying, American saw a 6.4 percent increase.

In its earnings conference call with analysts last month, American executives said bookings for the rest of summer and early fall were ahead of where they were at the same point in 2004, giving hope that the strong rally in air travel would sustain itself.

The revenue and traffic combination still won't outrun the oil price hike, which is being reflected in even higher jet fuel prices. Most carriers are projected to show losses in the final two quarters of the year and the industry is likely to show a 2005 net loss of several billion dollars.

Delta shares dove 44 cents -- nearly 15 percent -- to $2.53 on reports that it's likely to file for protection from creditors before substantial changes in bankruptcy law prevent it from paying key officers bonuses for staying on through its reorganization.

Delta has repeatedly warned investors that it's likely to file unless it can raise cash and get pension payment relief passed in Congress.

"Absence of either virtually assures bankruptcy, in our view," wrote Mr. Baker in a separate investors note last week.

-----

To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http://www.dallasnews.com.

Copyright (c) 2005, The Dallas Morning News

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

AMR, DAL, NWAC, CAL, JPM,

Source: The Dallas Morning News

More News in this Category