UPDATE 1-US airlines see recovery in business travel demand

Wed Dec 9, 2009 2:07pm EST

* Airlines see improvement in 2010 outlooks

* Delta expects return to growth in 2010

* Arca airline index down 1 percent (Adds US Airways quote, airline index)

By Kyle Peterson

CHICAGO, Dec 9 (Reuters) - The U.S. airline industry is seeing consistent signs of recovery that point to improved outlooks in 2010, executives at several top carriers said on Wednesday.

Speaking on webcasts of an analyst conference, industry leaders said business travel demand, which sagged earlier this year amid economic recession, was improving.

"I think we are seeing improvement in both leisure and premium traffic at this point," said Beverly Goulet, treasurer at AMR Corp AMR.N, parent of American Airlines, at the Next Generation Equity Research Conference.

"We continue to see strength in close-in bookings," she said.

The U.S. airline industry has grappled in the last year with falling demand -- especially for high-end business travel -- as the recession eroded travel budgets.

Several airlines executives have noted improved demand in recent months and said on Wednesday the outlook continues to improve.

Delta Air Lines (DAL.N), the world's largest carrier, said demand would remain strong and that it expects to see improvements in unit revenue in 2010.

"When is unit revenue going to go positive? I think we've seen a steady step progression," Delta Chief Financial Officer Hank Halter said. "I don't want to give a specific date or guidance, but clearly it's going to be in 2010 and likely it's going to be in the front half of 2010."

Kathryn Mikells, chief financial officer at United Airlines parent UAL Corp UAUA.O, also noted "signs of recovery on the horizon."

"We did begin to see corporate and premium traffic improving (in the third quarter)," Mikells said.

US Airways Group LCC.N President Scott Kirby said the airline also is seeing evidence of recovering business travel demand.

Gary Kelly, chief executive of Southwest Airlines (LUV.N), said, however, that business travel still lagged leisure and that he did not expect a rebound in business demand in 2010. Low-cost carrier Southwest caters less to business travels than its major rivals.

The Arca airline index .XAL was down 1 percent at mid-afternoon.

(Additional reporting by Karen Jacobs and Deepa Seetharaman; Editing by Steve Orlofsky and Richard Chang)

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