* United has better-than-expected results on revenue, costs
* American boosts margin view, to take charges
(Adds United results)
July 9 American Airlines Group,
Southwest Airlines and United Continental Holdings
on Wednesday cited growth in an important revenue
measure during 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.
United said better-than-expected results in the United
States and Asia led its unit revenue to rise 3.5 percent in the
period, compared with an earlier forecast of 1 percent to 3
percent growth. 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 noted a
stronger-than-expected American outlook and said Southwest
revenue results were up "meaningfully."
Some airline analysts raised their profit estimates for the
second quarter, which typically includes some vacation travel.
American Airlines, formed in the late 2013 merger of AMR
Corp and US Airways Group, said it expects pretax margin of 12
percent to 13 percent for the second quarter, up from an earlier
view of 10 percent to 12 percent. UBS analyst Darryl Genovesi
said in a note to clients that Southwest's revenue momentum
could add 3 cents to his firm's profit estimate of 58 cents for
American also 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.
Recent profit warnings from European carriers 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
said second quarter unit revenue likely rose 6 percent.
McAdoo said the European carriers faced issues that did not
affect U.S. airlines as much, such as heavier competition from
Robert Mann, an airline consultant in Port Washington, New
York, said the European airlines that are reporting weakness
"are underperforming and as a result, they probably should look
inwardly to solve the problem."
Shares of major U.S. airlines rose, with American Airlines
ending up 4.3 percent at $41.99, Southwest finishing up 1.9
percent at $27.21 and Delta increasing 1.4 percent to $36.96.
United, which issued its update after markets closed, rose 1.3
percent to $40.07.
(Reporting by Karen Jacobs in Atlanta; Editing by Bernadette
Baum and Jonathan Oatis)