Airline shares fall as May traffic and revenue data is released
NEW YORK (AP) – Shares of major airlines slumped on Tuesday as Wall Street exhibited frustration with the industry’s traffic and revenue figures for May. Investors were particularly disappointed with Continental Airlines, the nation’s fifth-largest carrier, which said revenue fell on a per-seat basis by between 6 percent and 8 percent in May compared with last year and that it expects to lose money in the March-June quarter.
Brian Harris, an analyst at Salomon Smith Barney blamed the carrier’s – and the industry’s – troubles on “aggressive fare sale activity” – a trend Continental has been trying to reverse.
Since mid-April, Continental has tried three times to raise the round-trip price of leisure fares by $20, only to roll back the increases each time after some competitors would not follow. The latest attempt at a fare increase was made last Thursday, and was matched by American Airlines and Frontier Airlines before all three canceled it over the past weekend.
In its monthly traffic report released late Monday, Continental said passenger traffic declined by 8.3 percent in May to 5.1 billion revenue passenger miles, a measure of the number of paying customers that travel one mile.
Continental’s capacity, or the number of available seats, was down 9.9 percent compared with last year, which helped boost the percentage of seats filled, or load factor, by 1.3 percentage points to 73.5 percent. However, Continental said it would have needed a load factor of 78.7 percent to break even for the month.
Salomon Smith Barney’s Harris significantly lowered his second quarter earnings expectations for Continental on Monday. Instead of a 25-cent-per-share profit, Harris said he now expects Continental to lose 95 cents per share.
Shares of Continental dropped $1.55 a share, or 7.4 percent, to $19.50 in early afternoon trading on the New York Stock Exchange.
American, the nation’s largest carrier, said its passenger traffic was down 11.1 percent from a year ago, resulting in 10.3 billion revenue passenger miles.
The Fort Worth, Texas-based carrier’s load factor was 69.5 percent and capacity was down 12.3 percent.
Shares of AMR Corp., American’s parent company, were down 78 cents, or 4 percent, to $19.55 on the NYSE.
Passenger traffic was down 13.9 percent at No. 2 United Airlines to 9.2 billion revenue passenger miles. The carrier said its load factor was 73.2 percent, up from 70.4 percent a year ago, as capacity remained down 17.2 percent.
Shares of UAL Corp., United’s parent, fell 55 cents, or 4.6 percent, to $11.55 on the NYSE.
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On the Net:
http://www.aa.com
http://www.continental.com
http://www.united.com