Security Restrictions Didn't Hurt As Much As Feared

With one exception, US airlines saw increases across the board in year-on-year traffic numbers in September -- in spite of what proved to be a short-lived dip in air travel immediately following the implementation of tighter security restrictions the month before.

Reuters reports that of all airlines that have reported their September traffic numbers so far, only American Airlines reported a decrease in traffic compared to the same period in 2005 -- a 1.4 percent slip. Interestingly, American's feeder operation, American Eagle, posted an impressive 3.1 percent increase in September, compared to the same time last year -- a sign that regional operations are shouldering more of the load.

Southwest Airlines, United Airlines, and Continental Airlines also posted gains in year-to-date numbers, although data shows planes were somewhat less crowded in September 2006 than they were at the same time last year. Load factors eased for all three, as the number of available seats outpaced the increase in sales.

Still to report September numbers are Delta Air Lines and Northwest Airlines -- both of which are under Chapter 11 bankruptcy protection.

At least one analyst says the passenger numbers demonstrate airline profits for the third quarter will be strong.

"Nothing but good news, particularly for comprehensive network carriers," said Michael Boyd said. "Everything points to a recovered airline industry and a strong airline industry."

Calyon Securities analyst Ray Neidl added he has lowered his estimates somewhat... but still expects the industry to earn $1.5 billion in the third quarter. Neidl had predicted earnings of $1.3 billion for 2006.

Also helping airlines was the unexpected drop in fuel oil prices, with oil trading under $60 per barrel for the first time since February 2006. Analyst Boyd says that's another reason for airlines to be optimistic as they look ahead.

"We think 2007 is going to be a banner year," he said.

FMI: www.southwest.com, www.united.com, www.aa.com, www.continental.com