Airlines remaining cautious despite signs business travel is picking up

Airlines stay cautious despite signs of rebound

ATLANTA — Most major airlines aren’t planning to grow much this year, even as their reservation systems show a rebound in business travel.

Corporate bookings are picking up. More people are flying. But the mixed earnings show that the airlines still have costs — pension, labor and other non-fuel expenses — that can be a drag on profitability. And in recent months, they’ve also dealt with rising fuel prices.

Among the nine largest U.S. carriers, five reported profits for the final three months of 2009, while the other four posted losses.

So, most airlines won’t rush out to buy new airplanes or significantly boost the number of seats they offer. And those that charge fees to check passengers’ bags aren’t about to give up that revenue stream even if Southwest Airlines, which doesn’t charge those same fees, is siphoning away customers.

US Airways Group Inc., JetBlue Airways Corp. and Alaska Air Group Inc. signaled a cautious approach to the economic rebound as they released their financial results on Thursday for the fourth quarter of last year.

“We all in the industry have a good bit of work to do,” US Airways CEO Doug Parker said.

US Airways, based in Tempe, Ariz., lost $79 million loss in the quarter, compared with a loss of $543 million a year ago. Revenue fell 4.9 percent to $2.63 billion.

US Airways expects revenue per available seat mile — a key industry metric — to be up close to 10 percent in 2010, if the positive trends seen in November and December continue.

The airline is adding only four aircraft this year. Fuel costs are expected to be higher on average in 2010, but the airline plans to continue paying market rates and not hedging, citing the expense involved in insuring against price volatility.

US Airways expects overall capacity, as measured by available seats times miles flown, to be up only slightly in 2010 compared to 2009.

Alaska Air Group, based in Seattle, also is remaining disciplined on capacity. The operator of Alaska Airlines and Horizon Air expects only four plane deliveries in 2010 and three in 2011. The company said previously that Alaska Airlines’ capacity is expected to increase 1 percent to 2 percent in 2010, while Horizon Air’s will probably be flat.

The company posted a $24.1 million fourth-quarter profit compared to a loss of $75.2 million for the same period in 2008. Revenue rose more than 2 percent to $846.1 million from $827.1 million.

Alaska Air executives are concerned about higher pension and labor costs. They want to lower costs this year, and being smaller than many of its rivals means Alaska Air can make changes more quickly.

“Although we are not where we want to be, we are making great strides given weak demand,” CEO Bill Ayer said.

The company also has been very aggressive in discounting seats. Its advance bookings through March are solid.

JetBlue, meanwhile, had a profit of $11 million in the fourth quarter, compared to a loss of $58 million. Revenue rose 2.6 percent to $832 million from $811 million.

Still, the company, based in New York, is being cautious about 2010.

JetBlue expects sales to be hurt in the first half of 2010 by its transition to a new reservation system and by aircraft maintenance costs. There are also questions about the affect of the temporary closure of the main runway at John F. Kennedy International Airport, JetBlue’s home base. JetBlue’s departures will drop 10 percent while the runway is closed for improvements, March 1 to June 30.

JetBlue plans to defer delivery of 16 Embraer jets originally scheduled to be delivered between 2012 and 2016 until 2017 to 2018. Four other Embraer jets that were set for delivery in 2012 will be delivered this year.

JetBlue will deploy those planes in and out of Boston and the Caribbean, where bookings have been strong. The next new route is planned for May, to Punta Cana, Dominican Republic. Nonstop flights will operate from Boston’s Logan Airport and New York’s JFK.

JetBlue said its capacity will decrease in the rest of the cities it serves this year.

As for those fees the airlines charge: US Airways executives said the $500 million a year the airline generates from bag fees is too important to give up. They said bag fees may drive some customers from the major airlines to Southwest, which doesn’t charge for the first two checked bags. But they haven’t seen a meaningful impact on US Airways itself.

US Airways shares rose 28 cents, or 5.8 percent, to $5.14, while Alaska Air shares fell $3.91, or 10.7 percent, to $32.59 and JetBlue shares lost 44 cents, or 7.9 percent, to $5.11.