Planes operated by major US airlines are fuller than ever this summer, and the embattled carriers are seeing stronger revenues as a result, analysts said on Wednesday.
The record-high load factors bode well for airlines if they can keep the number of empty seats to a minimum. The industry has been weakened by high fuel prices and competitive pressures that make it hard for carriers to keep ticket prices high enough to cover costs.
But recent cuts in capacity have enabled airlines to raise fares to bolster revenue.
United Airlines on Wednesday said its passenger load factor reached a record 88.3 percent in June. Continental Airlines on Monday said its mainline load factor was a record 84.8 percent in June.
"We're now seeing the effects of major cuts in flight schedules, and the flights are becoming like sardine cans -- more bodies, fewer seats," said Joe Schwieterman, a transportation expert at DePaul University.
Continental estimated its mainline revenue per available seat mile increased between 9 and 10 percent in June. Continental is the only carrier that releases monthly revenue estimates.
Schwieterman said the full planes are good news for airlines, which have been pulling planes off less profitable routes. The high load factors may well continue beyond the peak travel season if airlines can keep their capacity down.
He warned, however, that while demand for airline tickets remains strong, crowded planes could mean long lines and waning customer service.
These conditions may blur the distinction between major airlines that cater to business travelers and low-cost carriers that offer cheap, no-frills transportation.
Low-cost carrier Southwest Airlines on Wednesday said its June load factor was 80.4 percent, compared with 76.2 percent a year earlier.
"These results are good indicators for the industry for June and heading into the summer," said Calyon Securities analyst Ray Neidl in a research note.
"We believe June results for Continental and the rest of the airlines should strengthen stock prices in the airline sector even amid high fuel prices," he said.
Airlines shares were mixed, however, with UAL down 3.36 percent on Nasdaq. Shares of Continental were up 0.81 percent at USD$29.74 on the New York Stock Exchange.
Southwest shares rose 0.91 percent to USD$16.62 on NYSE.
