Air Traffic On The Rise, Yields Still Weak

Four U.S. airlines this week reported October traffic numbers, three of which showed year-over-year increases. American Airlines, the world's largest airline, reported 1.7 percent fewer revenue passenger miles. US Airways thus far had the greatest increase, nearly 9 percent, followed by Southwest's 5.7 percent and Continental's 3 percent increases. All four airlines reported higher load factors. In Continental's case, the 74 percent load factor was an October record.

Meanwhile, US Airways estimated its revenue per available seat mile in October rose between 3 percent and 4 percent versus last year. Continental's estimate for October RASM was an increase of 3.5 percent to 4.5 percent.

Based on Continental's numbers, J.P. Morgan Securities analyst Jamie Baker estimated that the airline's system revenue in October rose 0.6 percent while yields fell 2.5 percent. "Results confirm what we already knew--summer is over," Baker said. "While in line with expectations, Continental's results certainly highlight the degree to which this remains a low-yield, traffic-driven recovery. Until such time corporate travel budgets are re-set--obviously a year-end occurrence--we do not anticipate anything other than anecdotal evidence of business travel recovery."