Airline stocks fall after revenue ratio dips at Southwest, fuel forecast rises at American

Energy Associated Press

Airline stocks fell Monday after oil prices rose again and Southwest and American each reported weakness in a key revenue figure.

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Both airlines indicated that there were more empty seats on planes than a year earlier, which could reinforce concern that airlines might add too many flights for the current level of travel demand.

U.S. crude oil jumped $1.62 to $53.31 per barrel in midday trading on the New York Mercantile Exchange. That raised the prospect that the recent sharp decline in jet fuel prices might be over. Oil prices are still down more than half from their summer 2014 highs, however, providing a windfall to big energy users including airlines.

Southwest Airlines Co. said Monday that January traffic rose 8.6 percent compared with a year earlier. But that failed to keep pace with a 10.2 percent growth in capacity, and the average Southwest flight was 75.1 percent full, down from 76.3 percent a year earlier.

The Dallas-based airline said that a key figure — revenue for every seat flown one mile — fell about 1 percent compared with January 2014. That closely watched ratio falls when airlines fill fewer seats or charge lower average fares.

American Airlines Group Inc. said that January traffic fell 2.8 percent while capacity shrank 0.2 percent. The average flight was 78.2 percent full, down from 80.3 percent in January 2014. The biggest increase in empty seats on U.S. flights and those across the Pacific.

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The Fort Worth, Texas-based company, which owns American and US Airways, expects the key revenue figure to decline between 2 percent and 4 percent in the first quarter versus a year ago.

The company expects jet fuel in the quarter will cost between $1.81 and $1.86 per gallon, versus a previous forecast of $1.71 to $1.76.

In midday trading, Southwest shares fell 89 cents, or 2.2 percent, to $43.25; American was off 86 cents, or 3.9 percent, to $46.28; United Continental Holdings Inc. fell $2.66, or 4 percent, to $64.92, and Delta Air Lines Inc. dropped $1.27, or 2.8 percent, to $44.24. Other airline shares also fell.