Airline Earnings Flying High, Real High (JBLU, LCC, DAL)

US Airways Group, Inc. (NYSE: LCC) is leading the pack with a gain of 5% so far this morning in the price of its shares. Profits more than tripled on strong seat demand to $1.54 per share, or $306 million in total. Excluding items, this would have been $1.61 per share, and sales were up 7% to $3.8 billion. Both figures were slightly above the estimates, but shares are indicated up more than 5% at $12.20 so far this morning.

Jetblue Airways Corp. (NASDAQ: JBLU) was more or less in-line with expectations. Earnings came in at $0.16 per share on a 10% gain in revenues to $1.28 billion. Fuel hedging played a role, with a 3% decline in jet fuel prices. JetBlue recorded a $4 million mark-to-market fuel hedge charge in the quarter. Shares are up 1.5% at $5.35, against a 52-week range of $3.40 to $6.32.

Delta Air Lines Inc. (NYSE: DAL) is on the rise so far this morning after beating earnings: $0.69 EPS versus $0.68 estimates. Revenues rose by more than 6% to $9.73 billion, also about 1% above estimates. The air carrier said that it expects to have strong profitability in the September quarter with a 10% to 12% operating margin as it has been implementing cost controls, revamping its domestic fleet and adding a refinery. Delta shares are up about 4% at $9.70 this morning, against a 52-week range of $6.41 to $12.25.

So, airlines are cheap when you look at them on the surface, with earnings all well under 10-times earnings. Unfortunately we all know what happens to profitability in recessions and in soft economies. There is a reason Warren Buffett says to never ever buy a commercial airline.

JON C. OGG