U.S. airlines had profitable third-quarter, but growth concerns loom

WASHINGTON, Fri Oct 12, 2012 – U.S. airlines are expected to report solid profits for the third quarter, thanks to steady demand and fuel prices that declined toward the end of the period, but signs of slowing growth could spell challenges for the rest of the year.

Unit revenue – a measure of how much airlines can charge for tickets and how full planes are – decreased at many carriers in September. In addition, the number of passengers boarding planes at most big U.S. airlines fell, as travel started its seasonal slowdown in the month.

“The revenue environment appears to be softening a bit,” said Ray Neidl, an aerospace analyst with Maxim Group. “People will be looking to see if these trends continue into the fourth quarter.”

The earnings reports kick off next week, with AMR Corp.’s American Airlines reporting on Wednesday, followed by Southwest Airlines Co. on Thursday.

The third quarter is traditionally strong for airlines as it includes the benefit of some summer travel. Among the five major U.S. airlines, all are expected to report profits. AMR, currently undergoing restructuring in bankruptcy, is expected post its first profit after seven quarters of losses.