But Low Fuel Prices Lead To Small Improvement On AMEX Index

It was a long November for most of the nation's airlines... as passengers flew away from the prospect of flying on commercial airliners, even over the traditionally packed Thanksgiving holiday weekend.

As ANN reported, Southwest saw its average load factor plummet to just 63.2 percent, down 6.1 from November 2007 numbers. Marketwatch reports other airlines saw even worse numbers, with cross-town rival American Airlines' traffic falling 14.5 percent in November over 2007 numbers, with a 4.6 percent drop in load factor.

The Fort Worth-based carrier's American Eagle regional subsidiary fared even worse... with a 21.5 percent drop in traffic, and a paltry 67.3 percent load factor. While all airlines rely on packed seats and healthy passenger revenue, regional airlines are particularly susceptible to poor performance in those categories, given the high operating costs of regional jets and the limited number of seats available.

Continental Airlines reported its November 2008 traffic fell 10.5 percent over 2007 levels, outpacing the airline's 7.3 percent cut in capacity and in available seat miles. Its load factor dropped nearly 3 percent compared with November 2007, to 77.3 percent... while RASM dropped as much as 2 percent.

Things were slightly better in Tempe, AZ, home to US Airways. The carrier reported a 6.9 percent drop in revenue passenger miles, while its load factor only fell 0.7 percent. The airline also posted a disquieting 3-5 percent drop in passenger revenue per seat mile, even though the carrier charges for nearly all on-board amenities.

Still, those numbers -- the best among a bad bunch -- actually resulted in a 2.8 percent bump to the airline's share price Wednesday. "Our November unit revenue was impacted by the deteriorating macroeconomic environment," said US Airways president Scott Kirby. "We continue to believe, however, that the impact of lower fuel cost will more than offset the decline in demand that we are currently anticipating."

Despite the poor performance numbers, there's reason for airlines and investors to be optimistic. Stock prices on the AMEX Airline Index rose 1.7 percent Wednesday, buoyed by the belief fuel prices will stay at current levels at least through the end of the year.

The overall index is still down 61 percent over the past year, however... meaning there's a lot of ground to make up.

FMI: www.usairways.com, www.aa.com, www.continental.com