March key month for airlines

By Marilyn Adams
USA Today

Six months after the terrorist attacks, airlines are still filling planes with deeply discounted fares, and carriers say March will be a pivotal month.

After losses last quarter, American Airlines and Continental Airlines have warned of sizable losses this quarter and possible losses for 2002. Two of American's jets were hijacked Sept. 11.

Yesterday, low-fare star Southwest Airlines — the only major airline to be profitable in the fourth quarter — said it might lose money this quarter. It would be its only quarterly loss since 1991, during the Persian Gulf War.

Still, shares of most major airlines climbed yesterday because of recent upbeat economic news; airlines' fortunes generally follow the economy.

Throughout the industry, fare deals are luring people back despite the disaster and long airport lines, but that improvement has come at a cost. Continental said yesterday that its February yield — passenger revenue per mile flown — was off 15.6 percent from a year ago.

"I've read a lot about the end of the recession, but we aren't seeing it in our business," Continental President Larry Kellner aid in an interview. "March will tell us a lot about where the business is going. There's Easter, spring break and traditionally good business travel. If fares stay at depressed levels this month, it's a bad sign."

Salomon Smith Barney analyst Brian Harris said March is normally a good barometer for the year.

Although he expects most airlines to make money by the third quarter, it's a far smaller industry than before Sept. 11.