JonnyKnoxville
Well-known member
- Joined
- May 20, 2004
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FORT WORTH — U.S. airlines today begin a series of earning reports that will put behind them their longest and deepest losing streak ever: a collective $35 billion loss over the five years ended in 2005.
Dallas-based Southwest Airlines (LUV) reported its 34th consecutive year of profitability with record revenue even as fourth-quarter profit declined 19% from a year ago as fuel prices and security costs increased.
For the full year 2006, net income was $499 million, or 61 cents per diluted share, compared with $484 million, or 60 cents per diluted share, for 2005. Excluding special items, 2006 net income was $587 million, or 71 cents per diluted share, compared to $425 million, or 53 cents per diluted share for 2005. Revenue grew 20% to $9.1 billion.
Net income in the fourth quarter fell to $57 million, or 7 cents a share, from $70 million, or 9 cents a share, a year ago. Excluding special items, the airline posted profit of $96 million, or 12 cents a share, up from $81 million, or 10 cents a share, last year. Revenue grew 15% to $2.3 billion.
Fort Worth-based American Airlines (AMR), the nation's largest carrier, said it posted its first full-year profit since 2000, helped by strong demand for travel that allowed carriers to raise fares throughout the year.
AMR said it earned $17 million, or seven cents a share, in the Dec. 31 quarter compared to a loss of $600 million, or $3.46 cents per share, a year earlier, when AMR was weighed down by special charges.
It marked AMR's third straight profitable quarter, the first time the airline company has achieved that since 2000.
AMR said it earned $231 million, or 98 cents a share, for all of 2006 compared to a loss of $857 million or $5.18 a share in 2005. Revenue rose 8.9%, to $22.56 billion.
When reports are in from all the big U.S. airlines in a few weeks, Wall Street is looking for a collective 2006 profit of $2 billion to $3 billion, not counting bankruptcy charges and other one-time accounting items.
Meanwhile, 2007 is starting off with a bang for the airlines, thanks to sharply lower fuel prices, continued strong demand from travelers and industry restraint in adding seats.
The Air Transport Association, the industry's chief trade group, is projecting 2007 profits of $4 billion to $5 billion, excluding one-time items. And that's among the more conservative projections.
As 2006 came to a close, Calyon Securities analyst Ray Neidl told clients that U.S. carriers could earn $6 billion before one-time accounting events this year. And that upbeat outlook was issued before the price of crude oil began its steep drop. Crude oil closed Tuesday at $51.21 a barrel, a 19-month low.
Neidl's forecast also came before the latest round of fare increases took hold during what normally is a slack travel period.
Last weekend, most of the USA's big network airlines tacked on $5 each way to the price of their fares. It was the first big fare increase of this year, but at least the 11th industrywide boost since the beginning of 2006, according to JPMorgan analyst Jamie Baker.
What's more, current analyst projections do not factor in what might happen to industry profits should any of the proposed or rumored airline mergers actually happen. US Airways has a pending offer for Delta Air Lines. Orlando-based discounter AirTran is bidding for Milwaukee-based Midwest Airlines.
A wave of airline mergers could be expected to reduce the available supply of airline seats, allowing airlines to further boost fares.
Analyst Susan Donofrio at Cathay Financial is looking for industrywide capacity growth of 4.3%, a relatively modest rise. The big network carriers will be most conservative in adding seats, she says, growing by just 2.7%, while low-cost airlines will grow about 10.3% and regional airlines by 5.4%.
Dallas-based Southwest Airlines (LUV) reported its 34th consecutive year of profitability with record revenue even as fourth-quarter profit declined 19% from a year ago as fuel prices and security costs increased.
For the full year 2006, net income was $499 million, or 61 cents per diluted share, compared with $484 million, or 60 cents per diluted share, for 2005. Excluding special items, 2006 net income was $587 million, or 71 cents per diluted share, compared to $425 million, or 53 cents per diluted share for 2005. Revenue grew 20% to $9.1 billion.
Net income in the fourth quarter fell to $57 million, or 7 cents a share, from $70 million, or 9 cents a share, a year ago. Excluding special items, the airline posted profit of $96 million, or 12 cents a share, up from $81 million, or 10 cents a share, last year. Revenue grew 15% to $2.3 billion.
Fort Worth-based American Airlines (AMR), the nation's largest carrier, said it posted its first full-year profit since 2000, helped by strong demand for travel that allowed carriers to raise fares throughout the year.
AMR said it earned $17 million, or seven cents a share, in the Dec. 31 quarter compared to a loss of $600 million, or $3.46 cents per share, a year earlier, when AMR was weighed down by special charges.
It marked AMR's third straight profitable quarter, the first time the airline company has achieved that since 2000.
AMR said it earned $231 million, or 98 cents a share, for all of 2006 compared to a loss of $857 million or $5.18 a share in 2005. Revenue rose 8.9%, to $22.56 billion.
When reports are in from all the big U.S. airlines in a few weeks, Wall Street is looking for a collective 2006 profit of $2 billion to $3 billion, not counting bankruptcy charges and other one-time accounting items.
Meanwhile, 2007 is starting off with a bang for the airlines, thanks to sharply lower fuel prices, continued strong demand from travelers and industry restraint in adding seats.
The Air Transport Association, the industry's chief trade group, is projecting 2007 profits of $4 billion to $5 billion, excluding one-time items. And that's among the more conservative projections.
As 2006 came to a close, Calyon Securities analyst Ray Neidl told clients that U.S. carriers could earn $6 billion before one-time accounting events this year. And that upbeat outlook was issued before the price of crude oil began its steep drop. Crude oil closed Tuesday at $51.21 a barrel, a 19-month low.
Neidl's forecast also came before the latest round of fare increases took hold during what normally is a slack travel period.
Last weekend, most of the USA's big network airlines tacked on $5 each way to the price of their fares. It was the first big fare increase of this year, but at least the 11th industrywide boost since the beginning of 2006, according to JPMorgan analyst Jamie Baker.
What's more, current analyst projections do not factor in what might happen to industry profits should any of the proposed or rumored airline mergers actually happen. US Airways has a pending offer for Delta Air Lines. Orlando-based discounter AirTran is bidding for Milwaukee-based Midwest Airlines.
A wave of airline mergers could be expected to reduce the available supply of airline seats, allowing airlines to further boost fares.
Analyst Susan Donofrio at Cathay Financial is looking for industrywide capacity growth of 4.3%, a relatively modest rise. The big network carriers will be most conservative in adding seats, she says, growing by just 2.7%, while low-cost airlines will grow about 10.3% and regional airlines by 5.4%.
