(Recasts with Southwest, analyst comment)
July 9 American Airlines Group Inc and
Southwest Airlines Co forecast growth in an important
revenue measure for the second quarter, signaling that demand
for air travel is solid during the summer.
Unit revenue, also known as passenger revenue per available
seat mile, is expected to grow between 5.5 percent and 6.5
percent in the second quarter at American, while Southwest
forecast a rise of more than 8 percent. Unit revenue is a gauge
of how full planes are and of pricing power.
Demand "is as strong as ever," said Bob McAdoo, an airline
analyst with investment bank Imperial Capital, who said American
gave a stronger-than-expected outlook and that Southwest revenue
results were up "meaningfully."
Recent profit warnings from European airlines such as Air
France-KLM and Lufthansa had raised concern
about demand trends, pummeling share prices.
Last week, Delta Air Lines said unit revenue for
June grew less than it had forecast, citing lower business
demand for travel to Latin America during the World Cup soccer
tournament and capacity increases that hurt ticket prices. Delta
forecast a rise of 6 percent in its second quarter unit revenue.
McAdoo said the European carriers faced issues that did not
affect U.S. airlines as much, such as heavier competition from
The second quarter is typically a strong period for airlines
because it includes some vacation travel.
American Airlines, formed in the December 2013 merger of AMR
Corp and US Airways Group, said it could take charges of up to
$630 million in the period. It cited a charge of about $330
million tied to the sale of its portfolio of fuel-hedge
contracts and an added $250 million to $300 million in charges
related to its merger and other items.
Shares of U.S. airlines were mostly higher in morning
trading, with American Airlines up 1.9 percent at $41.01 and
Southwest up 2.1 percent at $27.26. Delta was up 1.5 percent at
$36.98, and United Continental was off 0.1 percent at
(Reporting by Karen Jacobs in Atlanta; Editing by Bernadette
Baum and Jonathan Oatis)