Signs of recovery are popping up in many corners of the U.S. economy, but the bosses of major airlines are still reaching for that rainbow.
Quarterly results reported by Delta Air Lines Inc and US Airways Group Inc on Thursday underscored their plight, which is characterized by weak revenue caused mainly by sagging demand for high-end business travel.
The figures from Delta and US Airways, which sent their shares lower, were consistent with those reported this week by big rivals.
The industry is groping its way through what Delta executives called a choppy economy.
US Airways, Delta and other airline executives told analysts in conference calls that they see encouraging fourth-quarter booking and revenue trends. The outlook then gets cloudy, with fares expected to stay low for the most part and fuel prices, which dropped substantially this year, again on the rise.
We remain cautious in these early stages of an uncertain recovery, Delta Chief Executive Officer Richard Anderson said.
Morningstar equity analyst Basili Alukos said uncertainty about business travel is the big wild card: How strong will a return of premium-paying passengers be?
My guess is that it will definitely be muted, Alukos said.
Shares of Delta, the world's largest airline, were up 11 cents or 1.3 percent at $8.44 on the New York Stock Exchange in afternoon trading. US Airways' shares fell 8 cents or 2.1 percent to $3.79. also on the NYSE. The Arca airline index <.XAL> was down 0.3 percent.
Delta, which bought Northwest Airlines in October 2008, said its net loss was $161 million, or 19 cents per share, including $212 million in special charges.
Excluding the charges, Delta reported a profit of 6 cents per share. Analysts on average had expected a loss of 5 cents, according to Thomson Reuters I/B/E/S.
Delta operating revenue declined 21 percent, with revenue per passenger mile down 17 percent.
Delta has slashed available seats and said it would continue to restrain capacity and aggressively control costs. The company plans to cut capacity by 3 percent in 2010.
Delta hopes for better performance once its Northwest merger integration is complete. Virtually all of the pieces should be in place early in 2010, executives said.
US Airways said its net loss totaled $80 million, or 60 cents per share, compared with a loss of $866 million, or $8.46 per share, a year earlier.
Excluding one-time items, US Airways lost 83 cents per share. On that basis, Wall Street had expected the company to lose 94 cents per share, according to Thomson Reuters I/B/E/S.
Total revenue in the third quarter fell 16.6 percent from the year-ago period to $2.72 billion due to a 3.6 percent decline in total available seat miles, the airline said.
LOW COST PROFITS
The low cost sector, which depends less on business travel, has been an industry bright spot.
JetBlue Airways Corp and Alaska Air Group Inc both reported quarterly profits on Thursday, helped by lower fuel prices.
JetBlue said net income was $15 million, or 5 cents per share, compared with a loss of $8 million, or 3 cents per share, in the year-earlier quarter.
A $148 million reduction in fuel costs helped push down total operating expenses by 10 percent.
Alaska Air Group, the parent of low-cost carrier Alaska Airlines, said net income was $87.6 million, or $2.46 per share, compared with a net loss of $86.5 million, or $2.40 per share in the comparable period last year.
JetBlue shares were off 2.7 percent while Alaska shares fell 4.3 percent.
(Additional reporting by John Crawley; Editing by Gerald E. McCormick and Gunna Dickson)