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Airlines tell a tale of 2 camps _ profit vs. loss

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ATLANTA (AP) ‚ The recession has put the major U.S. airlines into two camps ‚ the profitable ones that have low costs and a domestic focus, and the money-losing ones with higher expenses and big networks that are under global pressure.

That stark contrast played out again Thursday as Alaska Air Group Inc. and JetBlue Airways Corp. said they were in the black in the third quarter and Delta Air Lines Inc. and US Airways Group Inc. remained in the red.

Passengers can expect more fare sales, but ticket prices will creep up at times and will be more expensive during the holidays. Those annoying add-on fees won't be going away either.

The airlines know passengers aren't eager to open their wallets. Customers "continue to be under pressure ‚ budgetary pressure and pressure on the economic front," Delta President Ed Bastian said during a conference call with analysts and reporters.

The July-September quarter includes part of the traditionally busy summer season, but major airlines were hit hard this year by weak overall demand for air travel, especially for business and international travel.

Capacity has been shed, jobs have been cut and other operational changes have been made, including efforts to preserve cash.

Volume and revenue from corporate customers remain down for several airlines, but the margins have been improving in recent months.

Leisure travelers are starting to take to the air again, but they are paying smaller average fares, hitting the airlines' bottom line.

US Airways, based in Tempe, Ariz., blamed its revenue drop on the combination of less flying, "aggressive industrywide fare sales, and the reduction in business demand."

US Airways lost $80 million in the quarter as revenue fell 16.6 percent from the same period last year, to $2.72 billion. It ended the quarter with $1.5 billion in unrestricted cash.

Delta, based in Atlanta, lost twice as much in the quarter ‚ $161 million, compared to a loss of $50 million a year ago. Its revenue, if its Northwest Airlines subsidiary was included in the 2008 figure, fell 21 percent on a combined basis year-over-year. Delta ended the quarter with $5.8 billion in unrestricted liquidity, including $5.5 billion in cash, cash equivalents and short-term investments and $300 million available in a revolving credit line.

On the flip side, improvements it has made in on-time performance and being insulated from the slump in international travel helped Alaska Air post a profit for the third quarter. The Seattle operator of Alaska Airlines and Horizon Air recorded an $87.6 million third-quarter profit, compared to a net loss of $86.5 million a year ago. Revenue fell 9 percent to $967.4 million from $1.07 billion a year ago.

JetBlue, based in New York, earned $15 million in the third quarter, compared with a loss of $8 million a year ago. Revenue fell 5.3 percent to $854 million.

The big carriers aren't in a hurry to grow with the economy in the early stages of a recovery. They want to be careful not to do more flying than passengers are willing to pay for. By keeping capacity in check, they believe they will be able to charge more for tickets.

Delta plans to cut system capacity 3 percent next year. At least one low-cost carrier that posted a profit this week ‚ AirTran Airways ‚ actually plans to add capacity next year, in the range of 2 percent to 4 percent.

JetBlue CEO Dave Barger said his airline is still a growth company.

"We have a considerable number of (aircraft) in our order book, and I think we're looking forward to deploying them, you know, playing some offense in the not too distance future," he said.

But don't expect checked bag fees and other fees to go away. JetBlue said Thursday it won't rule out charging for a first checked bag.

In Thursday afternoon trading, Alaska Air shares fell 62 cents, or 2.3 percent, to $26.98, JetBlue shares lost 9 cents at $5.65, Delta shares rose 12 cents to $8.45 and US Airways shares lost a penny at $3.86.

Copyright 2009 The Associated Press.




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