* Analysts expect good Q4 for airlines
* United disappointed as revenue underperformed
* Southwest in line, Alaska Air tops estimates
By Karen Jacobs and Nivedita Bhattacharjee
Oct 24 Southwest Airlines and United
Continental Holdings made more money in the third
quarter as higher airfares bolstered revenue, capping a strong
week of earnings for major U.S. airlines that bodes well for the
United missed estimates on Thursday as it grappled with
revenue management shortfalls and competitive pressure, while
Southwest's profit was as analysts expected.
Alaska Air Group, a smaller carrier based in
Seattle, reported higher-than-expected earnings.
United shares fell as much as 4 percent before recovering.
Most other airline stocks moved up, with US Airways Group
up 6 percent and American Airlines parent AMR Corp
, with which it hopes to merge, up nearly 9 percent in
U.S. airlines have merged, boosted airfares and better
aligned their flying with demand to improve results. The
industry is on track to post higher profits for 2013 over 2012,
"The airlines will have a very good year this year and
things are poised to be good in the business environment for
next year," said Henry Harteveldt, a travel industry analyst
with consulting firm Hudson Crossing LLC. "But the airlines have
to deliver what the customers want."
Southwest and United carried fewer passengers in the third
quarter but had higher average fares. Delta Air Lines,
US Airways and AMR Corp earlier posted profits that topped
estimates for the third quarter, a seasonally strong period that
includes summer vacation travel.
While the two-week U.S. government shutdown hurt early
October revenue, many carriers said travel demand had bounced
back. Delta said margins would expand in the current quarter,
and Southwest, American and US Airways cited good bookings.
"We heard most airline executives say that holiday bookings
are stacking up very strongly, yields are holding up and I think
the industry is still pretty healthy," said Jim Corridore, an
equity analyst with S&P Capital IQ. He said he expected demand
to strengthen, barring any major shocks that disrupt travel.
Southwest had net income of $259 million, or 37 cents a
share, in the third quarter, compared with $16 million, or 2
cents a share, a year earlier. Excluding items, profit was 34
cents a share, in line with analysts expectations, according to
Thomson Reuters I/B/E/S. Quarterly revenue at Southwest rose 5.5
percent to $4.5 billion, as the average fare rose 11 percent to
United earned $379 million, or 98 cents a share, up from $6
million, or 2 cents a share, a year earlier. Excluding merger
costs, profit was $1.51 a share. Its revenue rose 3 percent to
$10.23 billion as yield, a gauge of the average fare paid per
mile flown, rose about 2 percent to 15.96 cents.
Shares of United were up 0.5 percent at $31.09, and
Southwest rose 2.6 percent to $16.84. Alaska Air was up 3.7
percent to $69.54.