The long-awaited turnaround in the airline industry's passenger revenue per available seat mile metric is going to be awaited for a bit longer.
From the first third-quarter airline earnings report by Delta (DAL) - Get Report on Oct. 13 to Wednesday's report by Southwest (LUV) - Get Report the message has been consistent: We don't yet see positive PRASM.
Rather, September was the 18th consecutive month of domestic PRASM declines and the 28th consecutive month of international PRASM declines, according to Deutsche Bank analyst Mike Linenberg. Both trends are continuing in October.
In general, declining revenue is a result of lower oil prices and resultant fare discounting. Lower oil prices ought to benefit airline shares but they have not because investors consider the metric more important than the record profits the industry has been producing.
Delta, the first airline to report third-quarter earnings, had set a goal of positive unit revenue by the end of 2016, but the carrier said it expects current quarter PRASM to decline between 3.5% and 5%.
"The biggest challenge we face as a company is the persistent decline of unit revenue," President Glen Hauenstein said on Delta's call. "We expect to get to positive unit revenues by early next year."
On Wednesday, Southwest beat analysts' estimates, earning 93 cents a share, ahead of the consensus of 88 cents. But the carrier said "the overall revenue yield environment remains soft," and guided toward a current quarter revenue decline between minus 4% and minus 5%.
Linenberg had forecast minus 2.6%; Cowen & Co. analyst Helane Becker had forecast minus 2.7%.
"Southwest is the only airline to report that it is seeing no sequential improvement in unit revenue performance," Becker wrote in a note Wednesday morning.
Southwest shares were trading at $37.30, down about 11%.
Spirit forecast unit revenue between minus 3% and minus 4.5%, but Becker said that is "well ahead of our initial assumptions," adding that Spirit is seeing meaningful sequential improvement from the third quarter of 2016 to the fourth quarter.
As for JetBlue, Stifel analyst Joseph DeNardi said he assumes a current quarter PRASM decline of 3%, based on the carrier's month-by-month guidance. JetBlue missed earnings estimates and reported rising costs at a time when Southwest is growing in Fort Lauderdale, Fla., a key JetBlue city.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.