AMR, Southwest Profits Surge Even as Fuel Prices Stay High
American Airlines' AMR Corp. parent and Southwest Airlines reported sharply increased profits for the second quarter, signaling a continuing rebound in the U.S. airline industry even as fuel prices remain high.</br></br>The results underscore how aggressive airlines have been at slashing costs and running more-efficient operations. AMR spent nearly 30% more on jet fuel than it did in the year-earlier quarter -- $1.71 billion compared with $1.35 billion -- but cost containment in other areas such as maintenance and wages still enabled it to report a profit five times that of a year earlier.</br></br>Fuel prices remain the wild card and threatens to damp progress if prices rise further. Fuel now represents more than 31% of AMR's expenses, compared with just 12% four years ago, and the airline has continued to revise its price estimates upward. In January, AMR estimated an average full-year fuel price of $1.95 a gallon, which it increased to $2.07 in April and $2.18 yesterday.</br></br>U.S. airlines are digging their way out of a long-running financial slump that resulted in more than $40 billion in net losses since 2001. This year, the industry's losses should narrow to no more than $2 billion, before turning a profit next year, according to the Air Transport Association, an industry group.</br></br>Continental Airlines, US Airways Group Inc., AirTran Airways parent AirTran Holdings Inc. and Alaska Air Group Inc.'s Alaska Airlines are all expected to report profits for the second quarter and full year, according to analyst estimates provided by Thomson Financial. JetBlue Airways and UAL Corp.'s United are pegged for second-quarter profits, too, though they are expected to post losses for the full year. Meanwhile, Delta Air Lines and Northwest Airlines -- both mired in bankruptcy-court proceedings -- are expected to stay in the red for the second quarter and year.