US carriers overall see a somewhat tenuous revenue environment, but remain optimistic that pricing should remain at viable levels.
American, United-Continental and US Airways in reporting their second quarter earnings offered different shades of colour on the current demand and revenue picture.
American CFO Isabella Goren declared the revenue environment during the second quarter improved modestly, "but unfortunately not enough to offset higher fuel prices".
For the remainder of the third quarter, Goren said American's book load factor is up slightly year-over-year and the US summer months are shaping up reasonably well in terms of revenue growth, "in particular to what we saw in June". However, she warned while current trends are better "than what we saw in June, it is clear that we still need more revenue traction to offset higher fuel prices".
Alaska Air Group CEO Bill Ayer offered a different view as he declared: "Passenger revenues improved by $128 million, both through higher load factors and fares, covering the increased cost of fuel."
US Airways also saw a weaker than expected June after originally forecasting its May and June revenue per available seat mile would be up in double-digits. The carrier's June RASM only grew by 6% year-over-year.
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Outlining the reasons for the weaker performance, US Airways president Scott Kirby said bookings from mid-May for June travel increased less than 5% year-over-year, but aggressive industry fare sales resulted in a one-to-two point increase in load factor, while yields decreased, which contributed to the disappointing June RASM statistics.
Citing booking volatility in the second quarter Kirby stated that he is more cautious than usual about demand going forward.
"Booked yields in July are up 9% year-over-year compared to only 3% in June." But Kirby cautioned some of that was due to more aggressive yield management as opposed to an improvement in the underlying pricing environment. US Airways expects a 7% year-over-year growth in RASM for July, and Kirby stated the carrier believes August and September will perform better on a year-over-year basis than July.
United-Continental estimates its July passenger revenue per available seat mile (PRASM) should grow 7% year-over-year. Carrier chief revenue officer Jim Compton cited a solid demand environment for the second quarter and noted double-digit fare increases in both the domestic and international markets as compared with 2010.
Compton explained corporate revenue continued to show slow but steady improvement in the second quarter, with corporate yields up 9% versus the year prior.
At this point, said Compton, the carrier is not seeing any significant change in demand that what occurred during the first six months of the year. "I'll say it's been average fare driven, and so the fare environment remains strong."
Source: Air Transport Intelligence news
