Travel picture looks different for low-cost carriers and major airlines


CHICAGO – Airlines reporting August passenger traffic so far are lining up in two camps: low-cost carriers like US Airways Group (LCC) say the picture is improving, but major international carriers, including British Airways, are still hurting from a downturn in business travel, their best source of revenue.

U.S. Airways on Thursday said August passenger traffic fell 3.9%, about in line with the airline’s 3.8% cut in seat capacity. Passenger load factor, or the number of filled seats per plane, was about the same as a year ago, at 85%. While passenger revenue per seat-mile, the common industry revenue measure, fell 15% from last year, president Scott Kirby said US Airways is “encouraged that recent booking trends and yield improvement trends are continuing into September.”

British Airways reported that overall passenger traffic fell 0.7% in August, with premium traffic down 11.9%. Leisure traffic rose 1.3%, mainly fueled by fare sales. Market conditions remain unchanged, the British airline said Thursday, noting that yields, or profits per passenger, are coming under pressure from lower fuel surcharges than last year.

Low-cost Ryanair Holdings Plc said passenger traffic jumped 19% in August, on a 90% load factor. Another European no-frills carrier, Easyjet, said traffic rose 4.8% last month, and said it still plans near-term average growth of 7.5% per year.

On Monday, Continental Airlines Inc., the first major international carrier to report results, estimated that August passenger revenue fell between 16.5% and 17.5%. The airline said load factors were at record levels for the month, with traffic down 3.9% on a 6% reduction in seat capacity, compared to last year.

Standard & Poors cut its ratings on Continental’s unsecured debt this week to “highly speculative,” with a negative outlook. The ratings agency based its decision on declining aircraft values, caused by the global aviation slump.

S&P said it expects the airline industry to face a prolonged weak travel environment. Although passenger demand is improving, carriers are coping with rising fuel prices, and few are able to turn a profit.