Delta Air Lines Inc., American Airlines parent AMR Corp. and US Airways Group Inc. posted profits that beat analysts’ estimates, buoyed by rising fares in what may be the industry’s best quarter since 2007.
Delta’s profit excluding certain costs was $1.10 a share, topping the 94-cent average of 13 estimates compiled by Bloomberg, while US Airways’ $1.23 a share on that basis exceeded the $1.17 estimate. AMR had net income of $143 million, or 39 cents a share, to beat the 32-cent average estimate.
Today’s reports were the first among the major U.S. airlines for the third quarter, with most of the rest following tomorrow. Restraint in adding seats helped Delta, American and US Airways fill planes and raise ticket prices after year- earlier losses, and the shares jumped in New York trading.
“These are three very solid beats, and it bodes well for the rest of the group,” Michael Derchin, a CRT Capital Group LLC analyst in Stamford, Connecticut, said in an interview.
Combined profit at the eight biggest U.S. airlines may be $2.1 billion to $2.4 billion, according to estimates by Derchin and Deutsche Bank AG’s Michael Linenberg. Earnings in that range would be the strongest since 2007’s second quarter. Delta, American and US Airways are ranked second, third and sixth in the U.S. by passenger traffic.
Improving demand for business travel, which is typically booked at the last minute and is more profitable than leisure trips, is helping the industry. Atlanta-based Delta said its yield, or the average fare for each mile flown, rose 16 percent.
Delta rose 97 cents, or 8.3 percent, to $12.67 at 11:33 a.m. in New York Stock Exchange composite trading. Fort Worth, Texas-based AMR gained 45 cents, or 6.9 percent, to $6.97, while US Airways increased 56 cents, or 5.6 percent, to $10.65.
Delta said third-quarter sales climbed 18 percent to $8.95 billion, led by a recovery in travel to Asia and Europe. That exceeded the $8.82 billion average estimate among 10 analysts.
Including what Delta said were one-time costs, third- quarter net income was $363 million, or 43 cents a share, after a year-earlier loss of $161 million, or 19 cents.
The one-time items were $360 million, mostly non-cash, for extinguishment of debt; $153 million related to getting rid of more than 50 planes at its Comair regional unit; and $53 million in expenses from its 2008 acquisition of Northwest Airlines Corp., Delta said today in a statement.
Fourth-quarter seating capacity will increase by 5 percent to 7 percent from a year earlier, Delta said, with more flying to be done by existing aircraft and some jets pulled from temporary storage. That move reverses what Delta has called “very significant and sharp” reductions during the recession.
AMR, US Airways
The profit at AMR snapped seven straight quarterly losses, including a year-earlier loss of $359 million, or $1.26 a share. Sales rose 14 percent to $5.84 billion.
Passenger traffic rose 3.7 percent, and the average fare per mile increased 11 percent, American said today in a statement.
US Airways said net income was $240 million, or $1.22 a share, compared with a loss of $80 million, or 60 cents, a year earlier. That total was a third-quarter record for the Tempe, Arizona-based carrier, which said passenger traffic rose 2.8 percent and yield jumped 14 percent.
Sales rose 17 percent to $3.18 billion, US Airways said today in a statement.
US Airways said it expects to begin hiring flight attendants in early 2011, after recalling all its attendants who were previously furloughed. The carrier said earlier it would bring back 300 pilots and flight attendants.
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