Air Transport World

Sputtering after strong '06.(FINANCE)

While US carriers are certainly in far better shape financially than in recent years, "profitability" is a relative term. Even considering that the first quarter is traditionally the weakest reporting period, it's hard to view the year's first three months--when half of the 10 largest US airlines were in the red--as anything but slightly disappointing given that 2006 was the industry's best year since 2000 and better results are expected in 2007.

The carriers avoided big losses but profits were modest, with Southwest Airlines and American Airlines leading the industry with net income of $93 million and $81 million respectively. Overall, the nation's 10 largest airlines produced a cumulative net loss of $341.9 million, narrowed from a loss of $3.32 billion in the year-ago quarter when bankruptcy restructuring costs led Northwest Airlines and Delta Air Lines to post more than $3 billion in losses by themselves. NWA and DL fared much better in this year's first period, recording net losses of $292 million and $130 million respectively. Excluding the bankrupt carriers, the other eight had cumulative net income of $80.1 million.

Seven of the 10, including both NWA and DL, were profitable at the operating level, with the industry posting a cumulative operating profit of $758.3 million, reversed from an operating loss of $483.5 million in the year-ago quarter when six of 10 carriers reported operating deficits. Slow growth was again a prevalent theme as the 10 increased collective capacity by just 2.4% with six of them keeping ASM growth to 3.1% or lower. With load factor virtually flat at 76. …

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