Third quarter good to airlines

Southwest Airlines Co. and four other carriers reported third-quarter profits Thursday that met or beat Wall Street estimates and projected solid bookings for the future.

Dallas-based Southwest, Philadelphia's second-busiest airline, said it earned a record third-quarter profit of $205 million, or 27 cents a share, compared with the year-earlier loss of $16 million, or 2 cents a share.

Also reporting third-quarter profit Thursday were United and Continental Airlines, JetBlue Airways Corp., and Alaska Air Group Inc.

Although the economy remains fragile, U.S. airlines are in a better spot than many industries.

Passengers are returning, and because seat capacity - and the number of flights - was cut sharply because of the recession, carriers were able to charge higher fares. Planes are crowded.

Airlines this week posted their best third-quarter results in three years as more travelers took to the skies, and spent more for their tickets.

"What a difference a year makes," Southwest chief executive officer Gary Kelly told investors. "I am extremely happy with where we are with these results," although "there are always challenges in this very difficult airline business."

The risks include rising fuel prices and the uncertain global economic recovery.

United Continental Holdings Inc., the world's largest airline company by traffic, runs both United and Continental Airlines, which merged Oct. 1.

United, in the quarter ended Sept. 30, earned $473 million, or $2.12 a share, and a year earlier lost $57 million. Continental reported net income of $367 million, or $2.24 a share, after losing $18 million a year earlier.

"We still see good demand, particularly as business travelers are coming back," said Jeffery Smisek, CEO of the new airline to be called United. "We are mindful that general macroeconomic trends remain uncertain and fuel prices have increased considerably lately."

Jet fuel prices are up more than 11 percent since mid-August, said Zane Rowe, chief financial officer of the new United. "The next couple of quarters will be more challenging. We are heading into a seasonably weaker period, and oil prices have risen."

Airlines hope to keep planes full, and ticket prices higher, by not adding back too much capacity to their routes. "We remain committed to capacity discipline," Smisek said. "We will not grow for growth's sake, but only if we can maximize our profitability by doing so."

Discount carrier JetBlue said Thursday that third-quarter earnings rose to $59 million, or 18 cents a share, from $15 million, or 5 cents, a year earlier. JetBlue, which does not operate in Philadelphia, said it would continue to expand flights in Boston and the Caribbean. JetBlue chief executive David Barger said bookings were solid for Thanksgiving, and shaping up nicely for Christmas, Hanukkah, and New Year's.

Alaska Air said it earned $122.4 million, or $3.32 a share, compared with a profit of $87.6 million, or $2.46 a share, a year earlier. "Traffic is holding up despite the continued economic uncertainty," said chief executive William Ayer. Alaska does not fly out of Philadelphia International Airport.

"It's hard to find anybody who thinks the economy is really strong," said Southwest's Kelly, predicting over time a "gradual return" of more business travelers. "We see very strong demand for the next 60 to 90 days, which we think will carry through to the first quarter of next year."