Airline Profits Dry Up for Overseas Routes

Meanwhile, with the dollar potentially stabilizing, "we may be heading down the other slide of the slope" on currency benefits, Mann said.

Given the international trends, and the planned 10% cutbacks in fourth quarter domestic capacity, is it possible that domestic could become a hot spot?

"As we move into the third and fourth quarters, (with) all the capacity cuts coming out domestically, domestic is going to start outperforming because there is less capacity while there is still capacity growth internationally," said US Airways President Scott Kirby, on a second quarter earnings conference call. While the five other legacy carriers have around 40% of their capacity in international routes, US Airways has just 21%.

"Looking backward, we didn't have as much international exposure," Kirby said. "Looking forward that may be a good thing."

Ironically, low-fare carriers, while continuing to slow domestic growth, are eyeing close-in foreign markets. Southwest(LUV) plans to code share with Canadian carrier WestJet in a cross-border, low-fare partnership.

And AirTran(AAI) says it will likely add Caribbean flying this year, and possibly Latin America as well. "Latin American flights -- (typically) one flight a day in a city -- I think is the kind of thing you consider when you are in a slow-growth period," said CEO Bob Fornaro, on an earnings conference call.

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