CHARLOTTE, N.C. (
(DAL - Get Report)
both reported Wednesday that August unit revenue was higher than expected, pushing share prices up in morning trading.
Delta said August passenger revenue per available seat mile rose 4%, a result of "a stable demand environment, corporate travel momentum and revenue resulting from customer-facing product improvements," while US Airways reported a PRASM gain of 1%. In general, analysts had anticipated a 2% gain for Delta and some had anticipated that US Airways would report a decline.
Both carriers said comparisons were difficult due to the year-earlier temporary suspension of the Federal Aviation Administration excise tax: Delta said that absent the year-ago suspension, its unit revenue improvement would have been about 1.5 points higher.
US Airways President Scott Kirby, speaking at the Dahlman Rose transportation conference on Wednesday, said PRASM would have been 300 basis points higher without the excise tax suspension and the impact of Hurricane Irene. He said September PRASM growth would be around 2% and "the demand environment can improve" in the fourth quarter.
Kirby said business demand began to slow around the beginning of June as "headlines appeared to deteriorate." In other words, he said, while "core business travel" continued, non-essential business travel diminished due to headlines about Europe, the election, and "the fiscal cliff." However, less volatile leisure demand remained strong.
"The pricing environment remains strong; the industry is seeing steady demand," Kirby said. "I think business demand will return to the level it was in March and April."
The industry now awaits a traffic report from
(UAL - Get Report)
, which is scheduled to be released on Monday. In a recent report, Wolfe Trahan analyst Hunter Keay wrote that he expects United's August PRASM to be down about 4%, reflecting operational disruptions as well as underperformance.
"Anything worse than (minus) 5% would be a major disappointment and anything better than (minus) 2% would be a pleasant surprise," he said.