May 17, 2013

First quarter lifts airlines

U.S. airlines still lost money in the quarter, but not as much as during the same period in 2012.

The Associated Press

NEW YORK - U.S. airlines charged more in fares and fees and reduced debt as they improved their financial performance in the first quarter.

They still lost money, which is typical for the year's first three months as travel slows after the holidays and delays rack up from snowstorms. But the deficit was $552 million -- or $3.30 per passenger -- compared with $1.7 billion during the same period in 2012.

The industry's second-quarter results could show a hit tied to federal budget cuts. Looking further out, summer travel should pick up over last year but still trail its pre-recession peak, according to Airlines for America, the industry's lobbying group.

Airlines have been making a concerted effort to get their costs under control, said John Heimlich, chief economist for the lobbying group, during a media presentation Thursday.

That's a big challenge. Fuel accounts for more than a third of the airlines' costs and is largely out of their control. Airlines were able to lower debt and interest payments, Heimlich said, but the biggest gains came from more passengers as well as increasing airfares and charging more in fees.

Total operating revenue rose 2.5 percent year over year, Heimlich said.

As airlines take in more cash -- and remain profitable in other quarters -- they are investing in new planes, better first class seats, improvements to airport terminals, increased in-flight entertainment and better technology for tracking luggage.

Airlines are likely to take a financial hit to their second-quarter results due to lengthy delays in April caused by furloughs to air traffic controllers.

The Federal Aviation Administration had furloughed controllers for one week as part of a long-standing budget fight between Congress and the White House. About 7,200 flights were estimated to be delayed because of the controller shortage. Airlines for America estimates that 600,000 passengers were delayed, costing the airlines $50 million.

The lobbying group expects 208.7 million people to fly in June, July and August, up from 206.6 million last year but still down from the 2007 peak of 217.6 million. Planes will again be packed, the group predicts, with 86 to 87 percent of seats filled with paying passengers, about the same as the last four summers.

International travel will continue to aid the U.S. airline industry: 27.4 million of this summer's travelers will be coming from outside the country, a record.

The group also used Thursday's media briefing to reiterate criticism of the Department of Homeland Security for a decision to open a customs and immigration pre-clearance facility in Abu Dhabi, the capital of the United Arab Emirates.

 

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