Airlines' stock rise as they cut capacity

September 13, 2011 07:00 PM

Up, up and away

Shares of U.S. airlines were in the green on Tuesday, after executives from several companies said demand is strong despite economic concerns in a webcast from the Deutsche Bank Aviation & Transportation conference. American Airlines VP of Corporate Development Beverly Goulet said, “I think it’s fair to say that the environment seems to be holding up pretty well. Our booking levels are pretty consistent with where they were last year.”

Goulet also said the airline would cut capacity by about half a percent in the last quarter of 2011. Additionally, Delta Airlines said it would be cutting its capacity this quarter while Southwest CFO Laura Wright said capacity will be flat or slightly lower over the next year. Higher fuel prices and a sluggish global economy have forced airline operators to cut costs to support the bottom line. Consolidation and trimming capacity have been two common methods used by airlines to create more efficient operations. Wright also said that Southwest’s September bookings are good so far and that the company expects revenue per available seat mile will increase in the low-to-mid single digit range in the third quarter.

U.S. Airways President Scott Kirby added to the optimistic outlook, commenting, “The demand environment is very robust. We just don’t see any evidence yet of a slowdown. I think you’re going to see strong revenue results across the industry in September and surprisingly good results, particularly in light of what you read in the headlines.”

AMR (AMR : NYSE : US$3.45), Net Change: 0.18, % Change: 5.50%, Volume: 15,812,229
Delta Air Lines (DAL : NYSE : US$7.99), Net Change: 0.61, % Change: 8.27%, Volume: 22,790,605
U.S. Airways Group (LCC : NYSE : US$5.64), Net Change: 0.79, % Change: 16.29%, Volume: 24,578,951
Southwest Airlines (LUV : NYSE : US$8.31), Net Change: 0.35, % Change: 4.40%, Volume: 13,392,497

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