Southwest Airlines Co. (LUV), American Airlines Group Inc. (AAL), United Continental Holdings Inc. (UAL) and JetBlue Airways Corp. (JBLU) on Thursday reported an increase in profit for the third quarter, helped mainly by improved passenger traffic and lower fuel costs.
Third-quarter earnings of Southwest Airlines, American Airlines and United Airlines topped Wall Street expectations, but JetBlue's earnings fell short of estimates.
Southwest Airlines said its profit growth was driven largely by revenue growth reflecting higher passenger traffic and lower fuel prices.
Dallas, Texas-based Southwest's third-quarter profit rose to $329 million or $0.48 per share from $259 million or $0.37 per share last year.
Adjusted earnings for the quarter were $382 million or $0.55 per share, up from $241 million or $0.34 per share last year. On average, 18 analysts polled by Thomson Reuters expected earnings of $0.53 per share for the quarter. Analysts' estimates typically exclude special items.
Southwest' operating revenues grew 5.6 percent to $4.80 billion from $4.55 billion, a year ago. Analysts expected revenue of $4.79 billion for the quarter.
Operating margin for the quarter improved 386 basis points to 13.5 percent driven by strong revenues, lower jet fuel prices, and a solid cost performance.
The company said its traffic and revenue trends were strong throughout the third quarter, generating a 4.5 percent year-over-year increase in unit revenues.
Chief Executive Gary Kelly said, "Our third quarter 2014 cost performance benefited from lower jet fuel prices and our fleet modernization efforts. With these trends continuing, we are poised for another solid cost performance for fourth quarter 2014"
Southwest's traffic, measured in revenue passenger miles or RPMs, increased 5.6 percent to 28.52 billion, while capacity, measured in available seat miles or ASMs, inched up 1.1 percent to 33.79 billion from last year. Load factor improved 3.6 percentage points to 84.4 percent from the year-ago quarter.
American Airlines' profit for the quarter surged from last year, as the world's largest airline's bottom line was boosted by merger and lower fuel prices.
Fort Worth, Texas-based American Airlines' third-quarter profit surged to $942 million or $1.28 per share, up significantly from $289 million or $1.02 per share last year.
American Airlines indicated it was more meaningful to compare year-over-year results for American Airlines and US Airways on a combined basis, which includes the results of US Airways Group.
On a combined basis, third-quarter profit was $1.2 billion or $1.66 per share. On average, 18 analysts polled by Thomson Reuters expected earnings of $1.63 per share for the quarter.
In 2013, American Airlines emerged from bankruptcy and closed its $11 billion merger with US Airways Group, Inc. in early December to form the world's biggest airline under the name American Airlines Group.
American Airlines' revenue for the third quarter surged 63.1 percent to $11.14 billion from $6.83 billion last year. On a combined basis, revenue growth was 4.4 percent from a year ago. Wall Street analysts had a consensus revenue estimate of $11.15 billion for the quarter.
Traffic edged up 0.3 percent, while capacity increased 2.0 percent from last year. Passenger load factor dropped 1.3 percentage points.
United Airlines' third-quarter profit rose to $924 million or $2.37 per share from $379 million or $0.98 per share last year.
Excluding $151 million of special items, adjusted earnings improved to $1.08 billion or $2.75 per share from last year's $541 million or $1.39 per share. On average, 18 analysts polled by Thomson Reuters expected earnings of $2.68 per share for the quarter.
Total operating revenues for the quarter rose 3.3 percent to $10.56 billion from $10.23 billion a year ago. Analysts had a consensus revenue estimate of $10.56 billion for the quarter.
The airline's total operating costs dropped 3.6 percent to $9.37 billion from $9.72 billion last year. United's traffic for the quarter increased 3.9 percent, while capacity improved 0.4 percent. Load factor inched down 0.1 percentage points to 85.8 percent.
New York's hometown airline JetBlue Airways' third-quarter profit rose to $79 million or $0.24 per share from $71 million or $0.21 per share last year.
Adjusted earnings were $79 million or $0.24 per share for the quarter. On average, 15 analysts polled by Thomson Reuters expected the company to report profit per share of $0.26 for the quarter.
Total operating revenues increased to $1.53 billion from $1.44 billion a year ago. Analysts had a consensus revenue estimate of $1.54 billion for the quarter.
Traffic for the third quarter increased 5.9 percent to 10.1 billion on a capacity increase of 4.5 percent. Load factor increased 1.2 percentage points to 86.2 percent.
"Our record results reflect the strength of our underlying business as we continued to drive margin improvement across our network," said Robin Hayes, JetBlue's President. "Our focus remains on improving results through ancillary revenue initiatives, cost control and profitable growth."
In Thursday's regular trading session, LUV is trading at $33.82, down $0.36 or 1.02%, while AAL is trading at $37.86, up $0.82 or 2.21%. UAL is currently trading at $49.56, up $0.50 or $1.02%, while JBLU is trading at $10.82, down $0.36 or 3.22%.
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