Delta Air Lines Inc (DAL.N) and US Airways Group LCC.N topped Wall Street profit estimates on Wednesday, but US Air signaled that corporate travelers could be growing more cautious, sparking concern about the outlook for airlines and spurring a retreat in the carrier's shares.
US Airways said on a conference call it had seen a "modest slowdown" in business demand, tied to economic worries. Its shares were down nearly 4 percent in late afternoon trading on Wednesday.
"The concern is if US Airways is saying macro-sentiment is causing softness in business demand, that's an issue," said Fred Lowrance, an analyst with Avondale Partners.
The shaky global economy is adding to questions on how demand for flying will look when travel goes into its seasonal slowdown in the fall.
"The question is post-Labor Day and with the weak economy, will airlines have to start discounting to fill seats?" said Maxim Group aerospace specialist Ray Neidl, referring to the U.S. Labor Day holiday in early September which marks the unofficial end of the summer season.
US Airways said passenger revenue per available seat mile, an important industry measure, would likely rise 1 to 2 percent in July and would be flat to up 2 percent in August and September. In the second quarter, that measure was up about 6 percent at US Air.
Delta forecast a profit for the current third quarter and said unit revenue was still expanding, albeit at slower rates compared with the last couple of years. It forecast unit revenue to rise 4 to 5 percent during July.
"As we head into the September quarter, the revenue trends appear solid despite the continuing weak economic backdrop we face," Delta President Ed Bastian said during a conference call.
U.S. airlines have merged, cut back flights to match demand and added charges for food and baggage to boost profit over the past two years.
Higher passenger revenue aided Delta and US Airways results in the second quarter, which is traditionally a solid one for airlines as travel picks up during warmer months.
"They are selling more expensive seats and less cheap seats," Neidl said.
On Wednesday, discounter JetBlue Airways (JBLU.O) said profit doubled in the quarter, helped by gains in business travelers. Southwest Airlines Co (LUV.N) topped earnings estimates last week because of higher fares and robust demand.
DELTA NET HIT BY FUEL HEDGES
Delta had a second-quarter net loss of $168 million, or 20 cents a share, after taking $754 million in charges, including costs of $561 million tied to fuel hedges and $171 million in severance as workers opted for voluntary early retirement.
Excluding items, Delta earnings came to 69 cents a share, compared with the analysts' average estimate of 68 cents, according to Thomson Reuters I/B/E/S.
At US Airways, which has expressed interest in merging with American Airlines parent AMR Corp (AAMRQ.PK), second-quarter net income more than tripled to $306 million, or $1.54 a share, from $92 million or 49 cents a share a year earlier. US Air said the result was the best quarterly profit for the company ever.
Excluding charges, earnings were $1.61 a share, while analysts had expected $1.56.
Operating revenue rose 6 percent to $9.73 billion at Delta and 7 percent to $3.75 billion at US Airways.
US Airways shares were down 3.8 percent at $11.15 in afternoon trading, while Delta was up 1 percent at $9.42. So far this year, Delta shares are up 16 percent, and US Airways stock has more than doubled.
JetBlue stock was down 1.7 percent at $5.18.
(Reporting by Karen Jacobs in Atlanta; Editing by Lisa Von Ahn and Matthew Lewis)