US Airways posts first profitable quarter in three years
Wednesday, July 21, 2010 at 03:20PM Results mixed but U.S. airline recovery advances
By John Crawley and Deepa Seetharaman
WASHINGTON/NEW YORK (Reuters) - U.S. airlines posted mixed results on Wednesday, with the sputtering U.S. economy and high fuel prices soft spots in an industry recovery boosted by rebounding demand and higher fares.
US Airways Group (LCC.N) set the pace with its first profitable quarter in nearly three years. The carrier beat Wall Street expectations and its shares gained more than 5 percent after it posted a net profit of $265 million, excluding special items.
Jim Corridore of Standard & Poor's reiterated a "buy" rating on shares of US Airways and increased the 12-month price target to $12 from $10.
American Airlines, a unit of AMR Corp (AMR.N), narrowed its loss with a 14 percent gain in average fares that helped generate $5.7 billion in revenues. Its shares were up about 1 percent in noon trading on the New York Stock Exchange.
American blamed its $11 million loss on $330 million in added fuel expenses.
"While the price of oil has not returned to the crisis levels we saw two years ago, it has been up substantially compared to last year," AMR Chief Executive Gerard Arpey said in a statement.
Crude oil prices slipped to around $77 a barrel on Wednesday.
Low-cost AirTran Holdings Inc (AAI.N) posted a lower profit as higher expenses outstripped rising revenue, pulling its shares down 1 percent.
The ARCA Airline Index was up 0.9 percent shortly after midday.
The performance of American was weighed against strong profits of rivals, including US Airways, current industry leader Delta Air Lines Inc (DAL.N) and United Airlines, a unit of UAL Corp (UAUA.O) that is set to merge with Continental Airlines (CAL.N).
United and Delta posted results earlier this week.
"There's a lot of concern that American is slipping and that they are losing share to the peer group, and they're just not growing," said Helane Becker, an analyst with Dahlman Rose & Co.
James May, chief executive of the Air Transport Association trade group, said major carriers are beginning to "dig out from the very deep hole" they were in just a year ago as the recession pounded travel demand.
Analysts credit recovering traffic, particularly from premium paying business customers, and higher fares. Ancillary revenue such as baggage fees have also contributed to airlines' brightening prospects.
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