U.S. airlines report strong third quarter profits

(Reuters) - Several U.S. airlines reported strong third-quarter profits on Thursday, helped by falling fuel costs, with many topping Wall Street's earnings per share estimates.

The results sent most airline stocks higher. The exception was United Airlines which fell 1.4 percent after it projected unit revenue for the current quarter below Wall Street's expectations.

However, the Chicago-based carrier as well as American Airlines and Delta Air Lines eased concerns about a drop in travel after saying Ebola had not affected their bookings for the year.

Investors are scrutinizing airlines for signs that the current quarter could be disrupted if the spread of the Ebola virus were to discourage travel and hurt the airlines' bottom lines.

United anticipates passenger revenue per available seat mile to be between a decrease of 1 percent and an increase of 1 percent for the current quarter because of charges related to reconciling interline tickets carried over from last year.

"We believe the Street did not remember to (account for) this," Cowen & Co analyst Helane Becker said in a note circulated Thursday, adding that its stock should rebound after United's earnings call that concluded around 11:30 AM Eastern.

American reported the largest net income at $942 million for last quarter, up nearly 87 percent compared to the combined incomes of American and US Airways last year before they merged in December 2013.

The Fort Worth-based carrier, the world's largest by passenger traffic, also earned $1.66 per share, excluding special items, beating analysts' estimates of $1.63, according to Thomson Reuters I/B/E/S. Its revenue was $11.1 billion, up 4.4 percent form a year ago.

Declining prices cut American's jet fuel costs by 1.3 percent, directly improving its bottom line because the airline does not hedge against these prices.

United posted a profit of $924 million, a gain of nearly 144 percent compared with last year. Diluted earnings per share were $2.75 without special charges, topping analysts' consensus estimate of $2.68. Total revenue increased 3.3 percent to about $10.6 billion, slightly beating Wall Street's expectations.

Southwest Airlines reported net profit rose about 27 percent to $329 million in the third quarter, following months of new route announcements overseas and from Dallas Love Field airport. Diluted earnings per share of $0.55 for the third quarter, excluding special items, were ahead of the Wall Street average estimate of $0.53, and up from 34 cents in the same period last year.

"Thus far, revenue momentum has continued into October 2014, with favorable load factor and unit revenue trends. Current bookings for November and December are also good," Southwest said.

JetBlue Airways earned $0.24 per diluted share without special items, falling short of the Wall Street estimate of $0.26. JPMorgan analyst Jamie Baker said in a note that the New York-based carrier was "poised to guide up." Analysts expect President Robin Hayes, who will take over as chief executive in February, to herald change at the airline to boost its profitability.

Hayes said there were plans to add to the company's return to capital during a conference call Thursday morning but did not disclose any pending changes at the airline.

JetBlue's net income rose about 11 percent to $79 million, compared to the third quarter last year.

(Reporting By Jeffrey Dastin; Editing by Alwyn Scott and Tom Brown)

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