Airline cutbacks could lead to return of profits

New travel fees have been introduced by most airlines during the past several months as a means of counterbalancing the rising cost of jet fuel. The fees are turning into hundreds of millions of dollars of new income for airlines that have been under severe financial pressure.

Executives are saying that they need this source of income more than before now, as the cost of fuel continues to drain profits out of the airline industry. It may be that a plane ticket now comes only with a promise of getting from one place to another.

JetBlue, United Airlines, and US Airways all posted significant losses on Tuesday, but at the same time, all three bested estimates on Wall Street. Airline stocks, at historic lows for many, rose as the price of oil decreased by more than $4 per barrel.

“We’ll manage through this,” said chairman and CEO of US Airways, Doug Parker, of the ongoing economic pressures. “It’s not outrageous to suggest that what’s already been done is enough to get the industry profitable in 2009.”

Last week, Delta Air Lines reported a loss of $1.04 billion for the quarter and AMR, parent of American Airlines, posted a loss of $1.45 billion for the same period. Continental Airlines’ loss was much smaller at $3 million.

Even with these gloomy numbers, airline executives are telling analysts on Wall Street that income from the new fees they’ve been charging may well lead to profitability.

www.usairways.com