Just when the battered travel industry had begun to recover from its post-9/11 crash, rising oil costs came along to threaten it anew. For now, high prices at the pump don't appear to have dampened Americans' desire to travel. But it remains to be seen whether oil will eventually take its toll on battered travel stocks such as SabreHoldings (NYSE:TSG).

With the price of crude on the rise, I would have expected the travel industry to follow retailers and airlines in their downward spiral. But so far, the climate for travelers remains strong. Going back to the Fourth of July holiday weekend, the American Automobile Association estimated that a record 40.3 million Americans would travel. An estimated 4.6 million of them planned to fly, representing a 4.2% increase from last year. In fact, the record number of travelers would exceed the mother of all travel holidays, Thanksgiving.

I've been keeping Sabre on my radar screen for the past few months to see what effect these travel trends will have on its share price, which has sagged nearly 28% over the past year. Increased competition from Priceline.com (NASDAQ:PCLN), InterActiveCorp's (NASDAQ:IACI) recent spinoff Expedia (NASDAQ:EXPE), and Orbitz, recently acquired by Cendant (NYSE:CD), has forced Sabre to cut jobs and consolidate. To make matters even worse, Yahoo! (NASDAQ:YHOO) has decided to enter the fray with its recent addition of FareChase.

As expected, Sabre reported second-quarter earnings (available here in PDF form) that disappointed investors. After adjustments for severance charges and investments in Travelocity Europe and lastminute.com, diluted earnings per share on a GAAP basis fell to $0.34 versus $0.42 in the year-ago quarter. Operating income on a GAAP basis also declined from $88.4 million in the year-ago quarter to $83.1 million in this one, a 6% drop.

But the business does appear to be growing. Sabre reported a 12.4% increase in revenues, with Travelocity leading the way with a 37% increase. And while Sabre has appeared to hit some turbulence, Merrill Lynch (NYSE:MER) recently steadied its course with an upbeat comment or two about Sabre's increasing market share and revenues.

No one knows what's on the horizon for the travel industry. Are the July Fourth travel numbers an indication of blue skies ahead, or will oil begin to ruin the visibility? With Sabre producing plenty of cash and trading at a P/E near 12, investors could have reason for soaring hopes if the current trends continue.

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At Motley Fool Inside Value , Philip Durell loves to invest in great companies unjustly beaten down by the market. To start your own search for the market's best bargains, try a free 30-day subscription.

Fool contributor M.D. Mitchell is down the street at the local junkyard looking for some good trash. He will read his email if he doesn't slip in the oil on the way back. He owns shares of Sabre but holds no financial position in any other companies mentioned. The Fool has a disclosure policy.