REBECCA RAYKO / FLORIDA
Confidence in the major is improving, but they still need more business passengers
US airlines continued to weather the effects of the recession and 11 September as 2001 came to a close. December performance results show traffic declines for most US carriers, although revenues look hopeful, analysts say.
Continental Airlines set a positive tone, reporting a record load factor of 72.7% in December, albeit on 12% less capacity. The results indicate that consumer confidence in the majors is starting to improve, but they must now generate higher quality revenue by attracting more business passengers, says Merrill Lynch analyst Michael Linenberg.
ABN Amro analyst Ray Neidl is also optimistic. Despite December's traffic drop, Neidl narrows his 2002 loss per share estimate for American Airlines, saying the industry may be recovering faster than previously expected. The consensus is that airline profits will begin to increase around mid-year.
Load factors improved for several major carriers toward year-end, but on 15-20% less capacity. Yields were down by as much as 25% from 2000 levels, says Salomon Smith Barney analyst Brian Harris.
Most US majors continued to reduce capacity in December, focusing on routes and passenger segments that would generate higher returns. These cuts will create further opportunities for low-cost carriers like Southwest Airlines and JetBlue.
Other smaller carriers like AirTran Airways and Vanguard Airlines began to show signs of recovery in December with healthy traffic gains. Kansas City-based Vanguard reported a 23% increase in December traffic year on year. President and chief executive Scott Dickson attributes the increase to recent major route restructuring. Vanguard increased capacity 9% in December compared to a year ago, beginning services to Colorado Springs and Fort Lauderdale. Loads also increased seven points to 62%.
US regionals improved as mainline carriers continued to transfer routes to their regional partners. The largest, American Eagle, also benefited from adding more Embraer regional jets to its fleet, with a systemwide traffic increase in December.
Delta Air Lines' regionals reported better traffic growth than their parent. Both Atlantic Southeast and Comair reported traffic gains in December, despite Delta's 11% drop. However, loads for the two regionals suffered as capacity growth outpaced traffic.
Source: Flight International
