Airline stocks were modestly higher Tuesday after the release of better-than-expected industry data.
Unit revenue at eight major U.S. carriers, measured in revenue per available seat mile, or RASM, fell 1.2% last month vs. November 2003, according to data from the Air Transport Association, an industry group. Wall Street analysts receive the numbers from ATA and then disclose them in research reports.
Although the year-over-year decrease shows the pricing environment remains tough for airlines, it marked an improvement over October's 2.9% decline. It also encouraged analysts somewhat.
The Amex Airline Index was up 1.4%. American Airlines' parent
gained 15 cents, or 1.5%, to $10.03.
was up 17 cents, or 1.4%, to $11.97, while
Delta Air Lines
rose a penny, or 0.1%, to $7.41, and
gained 31 cents, or 3.0%, to $10.48.
J.P. Morgan's Jamie Baker, who had forecast a 2.5% to 3.0% decline, said in a research note that the November results should be sufficient to bring about "modest upside" to analysts' fourth-quarter forecasts. (J.P. Morgan does and seeks to do business with companies it covers.)
Merrill Lynch's Michael Linenberg, who was expecting a 1.0% to 2.0% November decline, said in a research note that the overall weakness was a result of a 1.2% decline in domestic RASM. Outside the U.S., airlines fared better, with international RASM down just 0.3%, he noted.
The revenue declines come even as major U.S. airlines saw their load factor, a measure of seats filled on planes, increase 3.3 percentage points to 74.9%, which is high for November, Linenberg noted.
"As we head into the winter months, we expect domestic load factors to remain strong, accompanied by some yield recovery (or in other words, less of a yield decline than witnessed previously)," he wrote. "However, East Coast yields are expected to remain under pressure for the next two quarters. On the other hand, we expect international RASM to continue to outperform domestic RASM."
Earlier this month, Continental estimated its mainline RASM increased between 0.0% and 1.0% from a year earlier. The airline is the only U.S. carrier that releases monthly unit revenue.