CHARLOTTE, N.C. -- As a result of tumbling fuel prices, unprecedented capacity reductions and added revenue from new fees, several airlines reiterated their positive outlooks Tuesday, saying they expect a turnaround worth billions of dollars to their financial results.
At oil price levels around $50, Delta (DAL) will pay $5 billion less for fuel in 2009 than it paid in 2008, President Ed Bastian said at the Credit Suisse airline investor conference. UAL (UAUA), the parent of United, would save about $3 billion next year, said Chief Financial Officer Kathryn Mikells.
"The airline industry is of course also impacted [by recession]," Mikells said. "However, the capacity actions we announced earlier this year are serving us well. The drop-off we've seen in oil prices is poised to more than offset the impact from declining demand."
AirTran (AAI) CEO Bob Fornaro said he can't wait to see 2008 come to an end. "It's been a very tough one," he said. "But we acted quickly and decisively" to cut capacity.Airline shares were trading higher Tuesday. The Amex Airline Index was up 3% to 19.26. Among the leading stocks, US Airways (LCC) was gaining 7.4%, while Alaska (ALK) was advancing 7.1%. At Delta, first-quarter international bookings are running about 5% behind last year, Bastian said, though he cautioned that a clear picture has yet to emerge. Domestic bookings are flat, he said. Delta announced it will reduce next year's system capacity for the combined Delta/Northwest operation by 6% to 8%, including an 8% to 10% domestic cutback and a 3% to 5% international decrease. Including those reductions, over two years Delta will have pulled down 20% of its domestic capacity, Bastian said. In recent years, international capacity consistently has risen, he noted.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV