Airlines Shine in Augusthttp://www.fool.com/investing/general/2013/09/11/airlines-shine-in-august.aspx Adam Levine-Weinberg
September 11, 2013
After turning in inconsistent performances this spring, airlines have bounced back with a very strong summer travel season. In July, the five largest U.S. carriers posted strong unit revenue growth across the board. The same pattern played out in August as well.
Unit revenues stay strong
By contrast, Southwest Airlines increased capacity by just 1.4%, which is much slower than its typical growth rate in recent years. Moreover, it cut departures by 4% year over year. Thus, its capacity increases were the result of having more seats per plane (on average) and operating longer flights.
However, the result is that United's cost structure -- already one of the highest in the airline industry -- is diverging even more from peers. Cutting capacity boosts United's unit revenue by reducing the supply of seats on certain routes to better match demand. However, it also means that United is sp