US Airways, others report steep drop in May revenue

Most airline stocks headed lower today after carriers, including US Airways, reported steep drops in May revenue as fewer people flew because of the recession.

Philadelphia's dominant airline, US Airways Group Inc., said its consolidated passenger revenue, which includes mainline and express flights, plunged 18 percent to 20 percent.

The Tempe, Ariz., carrier reduced flights to Mexico because of the swine-flu outbreak, which the company estimated caused $20 million in lost revenue last month. The airlines did not release full monthly revenue figures.

US Airways said its mainline traffic declined 5.2 percent in May from a year ago on a 5.8 percent cut in capacity – seats and flights – from a year ago.

The May load factor, or percentage of seats filled, rose 0.5 points to 82.2 percent.

Low-fare carrier Southwest Airlines Co. reported today that its passenger revenue fell 9 percent in May compared with the same month last year.

Dallas-based Southwest, Philadelphia's second-busiest airline, said traffic slid 3.6 percent, while capacity declined 3.2 percent, as the recession damped travel. Its load factor dropped 0.3 points to 74.6 percent.

United Airlines said May passenger revenue fell 12.3 percent, while capacity fell 10.2 percent, and load factor fell 1.9 points to 80 percent.

American Airlines said May traffic fell 11.7 percent on 8.8 percent less capacity from a year ago. Load factor in May dropped 2.6 points to 79.2 percent. American does not detail monthly passenger revenue.

Continental Airlines Inc., the first major carrier to report, estimated its consolidated passenger revenue for May fell 19.5 percent to 20.5 percent. It said flight cuts because of swine flu accounted for $30 million of the revenue drop.

Continental said May traffic fell 9 percent from a year ago, while capacity declined 8.8 percent. The Houston carrier said its load factor fell to 80.9 percent, down 0.3 points from last May.

May was a "shoulder period" for airlines, with spring break and Easter in April, and the "true peak summer travel season" starting this month, analyst Bob McAdoo of Avondale Partners L.L.C. wrote in a note.

June results should improve "based on stronger seasonal trends," McAdoo said.

Kevin Crissey, a UBS AG analyst, said in a report to investors that "airline financials are troubling, particularly with fuel prices rising."

Crude-oil prices, which rose 26 percent in May, hovered just above $66 a barrel today.

"We are concerned about the revenue outlook after May," said Crissey, who predicted that June traffic "will be 2 to 3 percent worse" than May and "July could look like May. The forward curve for fuel is higher."

Airlines cut flights, routes, and aircraft last fall in response to $147-a-barrel crude oil in July. When financial markets collapsed in September and companies slashed travel budgets, airlines sharply cut fares to attract a shrinking pool of passengers, particularly business travelers.

Airlines are under pressure now to keep fares low, compared with a year ago when tickets cost more, to keep people flying.

Low-fare carrier AirTran Holdings Inc. said yesterday that its passenger revenue in May fell 11.1 percent from the same month a year ago; capacity, measured in available seat miles, fell 9.6 percent; and load factor fell 1.3 points to 78 percent.

US Airways shares slid 13 cents, or 4.22 percent, to close at $2.95. Southwest shares fell 7 cents to close at $6.97. American shares were down 10 cents at $5.20.

Shares of Delta Air Lines, which reports May traffic and revenue tomorrow, rose 33 cents, or 4.80 percent, to $7.21. AirTran shares were up 62 cents, or 10.92 percent, to $6.30. United shares rose 2 cents to close at $5.29. Continental shares slipped 43 cents, or 3.86 percent, to $10.72.

Contact staff writer Linda Loyd at 215-854-2831 or lloyd@phillynews.com.