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The Honolulu Advertiser
Posted on: Friday, January 29, 2010

Airlines remain cautious for 2010


By HARRY R. WEBER
Associated Press

ATLANTA Most major airlines aren't planning to grow much this year, even as their reservation systems show a rebound in business travel.

Corporate bookings are picking up. More people are flying. But the mixed earnings show that the airlines still have costs pension, labor and other non-fuel expenses that can be a drag on profitability. And in recent months, they've also dealt with rising fuel prices.

Among the nine largest U.S. carriers, five reported profits for the final three months of 2009, while the other four posted losses.

So, most airlines won't rush out to buy new airplanes or significantly boost the number of seats they offer. And those that charge fees to check passengers' bags aren't about to give up that revenue stream even if Southwest Airlines, which doesn't charge those same fees, is siphoning away customers.

US Airways Group Inc., JetBlue Airways Corp. and Alaska Air Group Inc. signaled a cautious approach to the economic rebound as they released their financial results yesterday for the fourth quarter of last year.

"We all in the industry have a good bit of work to do," US Airways CEO Doug Parker said.

US Airways, based in Tempe, Ariz., lost $79 million loss in the quarter, compared with a loss of $543 million a year ago. Revenue fell 4.9 percent to $2.63 billion.

US Airways expects revenue per available seat mile a key industry metric to be up close to 10 percent in 2010, if the positive trends seen in November and December continue.

The airline is adding only four aircraft this year. Fuel costs are expected to be higher on average in 2010, but the airline plans to continue paying market rates and not hedging, citing the expense involved in insuring against price volatility.

US Airways expects overall capacity, as measured by available seats times miles flown, to be up only slightly in 2010 compared to 2009.

Alaska Air Group, based in Seattle, also is remaining disciplined on capacity. The operator of Alaska Airlines and Horizon Air expects only four plane deliveries in 2010 and three in 2011. The company said previously that Alaska Airlines' capacity is expected to increase 1 percent to 2 percent in 2010, while Horizon Air's will probably be flat.

Alaska Air executives are concerned about higher pension and labor costs. They want to lower costs this year, and being smaller than many of its rivals means Alaska Air can make changes more quickly.

JetBlue, meanwhile, had a profit of $11 million in the fourth quarter, compared to a loss of $58 million. Revenue rose 2.6 percent to $832 million from $811 million.

Still, the company, based in New York, is being cautious about 2010.

JetBlue expects sales to be hurt in the first half of 2010 by its transition to a new reservation system and by aircraft maintenance costs.