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Helane Becker, Dahlman Rose director and analyst, breaks down what to expect from the airlines during this earning season.
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4% decline by the way on the day.
Earnings season for the airlines heating up this week and off to southwest's strong results how all the rest of the sector do -- joining me now is.
Elaine back -- -- and rose analyst and director joining us to talk about the airlines a case of southwest does well what are you expecting.
The other big airlines to do killing.
There were expecting record or near record results for the industry for both the second quarter in the third quarter.
Revenues are up and as you pointed out oil prices are down and that's carried through onto the cost side of the equation.
So were fully expecting.
A combination of strong track that high load factors lower cost to to really boost earnings have second quarter and third quarter should be very very good.
You know -- a lot of complaints about airlines that they are charging for everything now -- cut capacity there's no doubt about that so there are fewer planes so they can charge more for tickets but.
-- room for -- five full baggage for the air we breathe in the yet in the cabin com.
Are we ever gonna see any scaling back of that -- -- -- just here to stay -- -- just looking for new things to childish -- with.
I think it's here to stay initially I thought that you know we'd see especially in a downturn.
-- see them start to roll that back in May be one airline would break ranks and and it would all kind of go by the wayside but that's not happening in the industry.
Generated about 2.5 billion dollars in revenue from chancellor -- last year and that's revenue that they get to -- and I don't see that going away in the short term on at all so.
What's what's the biggest reason for these strong results do you think in the second and looking -- the there.
Yeah I mean I think you've got very strong -- saying you know as you pointed out oil prices were up last year -- significant -- And then they started to come down and there's always a lag affect between -- oil price is either go up an airline ticket prices go up or.
Prices go down -- ticket prices go down we estimated to be about a one to two quarter lag.
-- -- your thinking about you know booking your trips you're always gonna get great deals especially on Tuesday and Wednesday is read this -- the two days to book.
Carol and get all these -- you go long -- economic great deal once you I didn't all the fees in the taxes it doesn't seem -- -- deaths on the screen anymore availability get really good deals on for the non -- you can always find really good.
In good prices -- every wanna go if you don't wanna go during peak times in the industry is just learning how to price their products so that they can be profitable.
And for years and years they haven't -- capital to shareholders as it you know you probably are well over our.
They don't pay dividends except for one -- two companies here in there.
And indeed they really need -- -- in order for them to continue to invest in the business they have to return capital to shareholders have gotten.
Ten seconds American Airlines in bankruptcy does that airline emerge and and make -- go of it deaths.
That does it does come out if probably the area -- -- -- -- He's like he can't I think yes there racist that likely yes candidate all right we'll we will find out -- but if think you so much for joining us.
