This week will bring a barrage of airline quarterly reports, beginning with AMR Corp.’s American Airlines and UAL Corp.’s United Airlines this upcoming Wednesday. Airlines are expected to announce an additional $1 billion-plus in losses for the fourth quarter, and are expected to cite the weak economy. However airlines don’t have it too bad this quarter, considering they started making capacity cuts during the summer of high oil prices. Their new fees were originally there to cover the hefty fuel expense, but now they’re there for various reasons – mainly to cover the losses from the recession. Yet it won’t be all too bad since not all airlines are expected to report losses – like Southwest Airlines, who is expected to churn up a small profit for the fourth quarter of ‘08.
Although this past quarter’s report may look negative, it is the end of a mostly red year for airlines. Many agree that 2009 has much more to offer airlines – like profits (yes, it’s been long enough for some carriers to forget what that word means). As much as nearly $5 billion has been predicted in profit for carriers this year, a number I won’t be surprised to see them hit. Thanks to the massive fall of oil prices, airlines will be able to save an estimated $30 billion this year.
As airlines reduce capacity and begin to cut unprofitable domestic flights, I think we will see a shift in attention to international travel, as well as fleet renewal and upgrades (many have started). Somehow I think air travel will get much better this year.
Data: DallasNews
Image: stock.xhng
