hkskyline
June 16th, 2006, 07:17 AM
US airlines jump on summer profit hope, fare hikes
NEW YORK, June 15 (Reuters) - Shares of major airlines jumped on Thursday as investors anticipated higher revenue for carriers over the busy summer travel period, and an analyst said the current quarter would likely be the first profitable one for the industry as a whole in several years.
A business class fare increase by Delta Air Lines Inc. <DALRQ.PK> on Wednesday, which was matched by some other carriers, also helped the sector. The increase is the latest in a series of hikes this year, suggesting that strong demand for travel has given carriers the power to charge more for tickets.
"A lot of the airlines have been saying that their costs are a little lower ... and pricing is better than they thought," Benchmark Co. analyst Helane Becker said.
Shares of AirTran Holdings Inc. <AAI.N> led the rally, rising 9.6 percent on the New York Stock Exchange.
Shares of United Airlines parent UAL Corp. <UAUA.O>, American Airlines parent AMR Corp. <AMR.N> and Continental Airlines <CAL.N> rose more than 5 percent each, pushing the Amex airline index <.XAL> up nearly 6 percent.
"We expect the industry to report a net profit for the June quarter of $600 million," Merrill Lynch analyst Michael Linenberg wrote in a research note, after carriers reported a bullish outlook at a Merrill Lynch conference on Wednesday.
The U.S. airline industry, which has been dealing with high fuel costs and increased competition from discount carriers, is beginning to see its fortunes turn as companies cut back on capacity and demand for air travel remains strong.
Companies have been able to raise fares to offset at least some of the rise in fuel costs.
Bankrupt Delta raised its first class and full coach fares by $50 one-way in most markets on Wednesday, spokeswoman Chris Kelly said. The move was matched by United Airlines, American Airlines and Northwest Airlines Corp. <NWACQ.PK>.
Continental did not immediately return calls for comment.
"Constrained supply has provided support for numerous industry fare increases in response to ever-rising energy costs," Linenberg wrote. "Top-line growth is more than offsetting rising energy costs."
Linenberg added that the trend was expected to continue through the year.
NEW YORK, June 15 (Reuters) - Shares of major airlines jumped on Thursday as investors anticipated higher revenue for carriers over the busy summer travel period, and an analyst said the current quarter would likely be the first profitable one for the industry as a whole in several years.
A business class fare increase by Delta Air Lines Inc. <DALRQ.PK> on Wednesday, which was matched by some other carriers, also helped the sector. The increase is the latest in a series of hikes this year, suggesting that strong demand for travel has given carriers the power to charge more for tickets.
"A lot of the airlines have been saying that their costs are a little lower ... and pricing is better than they thought," Benchmark Co. analyst Helane Becker said.
Shares of AirTran Holdings Inc. <AAI.N> led the rally, rising 9.6 percent on the New York Stock Exchange.
Shares of United Airlines parent UAL Corp. <UAUA.O>, American Airlines parent AMR Corp. <AMR.N> and Continental Airlines <CAL.N> rose more than 5 percent each, pushing the Amex airline index <.XAL> up nearly 6 percent.
"We expect the industry to report a net profit for the June quarter of $600 million," Merrill Lynch analyst Michael Linenberg wrote in a research note, after carriers reported a bullish outlook at a Merrill Lynch conference on Wednesday.
The U.S. airline industry, which has been dealing with high fuel costs and increased competition from discount carriers, is beginning to see its fortunes turn as companies cut back on capacity and demand for air travel remains strong.
Companies have been able to raise fares to offset at least some of the rise in fuel costs.
Bankrupt Delta raised its first class and full coach fares by $50 one-way in most markets on Wednesday, spokeswoman Chris Kelly said. The move was matched by United Airlines, American Airlines and Northwest Airlines Corp. <NWACQ.PK>.
Continental did not immediately return calls for comment.
"Constrained supply has provided support for numerous industry fare increases in response to ever-rising energy costs," Linenberg wrote. "Top-line growth is more than offsetting rising energy costs."
Linenberg added that the trend was expected to continue through the year.