* Southwest expects lower unit revenue
* Both carriers seen posting higher Q2 profits
June 13 Delta Air Lines said on Thursday
it expects improved profit in the second quarter as declining
fuel prices boost margins.
"June is shaping up to be a strong quarter," Delta President
Edward Bastian told a Deutsche Bank investor conference. He said
the airline expected operating margin at the high end of an
April forecast of 9 percent to 11 percent.
Meanwhile, Southwest Airlines Co said it expects an
important revenue measure to decline in the second quarter,
saying it is having to work harder to stimulate traffic.
Chief Financial Officer Tammy Romo told the Deutsche Bank
conference that passenger revenue per available seat mile, which
is also known as unit revenue, would fall in the
low-single-digit percentage range in the current quarter
compared with a year ago.
"Revenue trends since March have been softer than we
anticipated," Romo said during the conference, which was
broadcast over the Internet.
Analysts currently expect both airlines to post higher
profit for the second quarter compared with a year earlier,
according to estimates from Thomson Reuters I/B/E/S.
U.S. airlines have reported weaker unit revenue, a measure
of how full planes are and pricing power, in recent months as
demand softened. Some carriers have said effects of automatic
federal spending cuts under the U.S. sequestration process and
the weaker yen have been factors in the weaker performance.
Unit revenue at Southwest, which offers fewer international
flights than Delta, fell 4 percent to 5 percent in April and was
down about 2 percent in May.
Southwest's Romo added that while bookings for June were
good, the company was cautious about summer demand and potential
effects from the U.S. budget cuts and higher taxes.
Delta said it expected unit revenue for the month of June to
be flat or rise as much as 1 percent. That would compare with a
rise of 0.5 percent it had in May.
Delta shares were up 3.3 percent to $18.66 in late afternoon
trading, while Southwest was up 1 percent to $14.01.