U.S. shutdown hangs over airlines even as profits beat

By Tracy Rucinski and Ankit Ajmera

(Reuters) - Three major U.S. airlines posted quarterly profits on Thursday that beat Wall Street expectations thanks to healthy passenger demand, but the carriers said the U.S. government partial shutdown was disruptive.

JetBlue Airways Corp Chief Executive Robin Hayes warned that the U.S. aviation system is nearing a "tipping point" and joined counterparts such as American Airlines Group Inc in voicing concern over long airport lines and flight delays.

JetBlue said it had not yet seen a major impact from the shutdown but was increasingly concerned about the consequences for air travel and the overall economy.

"And the longer this goes on, the longer it will take for the air travel infrastructure to rebound," Hayes said.

Dallas-based Southwest Airlines Co said the shutdown had knocked between $10 million and $15 million off its revenue in January and was delaying its plan to launch service to Hawaii, which was targeted for early this year.

As the government closure dragged into its 34th day, many non-essential federal workers, including those who oversee route authorizations and aircraft certifications, remained furloughed.

No. 1 U.S. carrier American said revenue per mile flown, a closely watched measure of performance that compares sales with flight capacity, would be flat to up 2 percent in the current quarter, taking into account the shutdown, which it said was affecting bookings of 14 days and less.

"We encourage the government to open," American Chief Executive Doug Parker said.

Still, American said overall demand, including for corporate travel, remained strong, and forecast $1 billion of additional revenue in 2019 as it continues to expand its Premium Economy product and adds gates at its Dallas-Fort Worth and Charlotte hubs.

The company, based in Fort Worth, Texas, forecast an increase in full-year earnings per share of 21 percent to 65 percent, compared with the 30 percent expected by analysts on average, according to IBES data from Refinitiv.

It said net income, excluding special items, rose 8.3 percent to $481 million, or $1.04 per share, in the fourth quarter. That beat analysts' estimate of $1.01 per share.

Total operating revenue rose 3.1 percent to $10.94 billion.

Southwest, the fourth-largest U.S. airline by passenger traffic, said revenue per available seat mile would rise in the 4 percent to 5 percent range in the first quarter after a 1.8 percent increase in the fourth quarter.

Net income at Southwest, a low-cost carrier with a reputation as employee and customer friendly, fell to $654 million, or $1.17 per share, in the fourth quarter, from $1.75 billion, or $2.94 per share, a year earlier. That beat analysts' average estimate of $1.07, according to IBES data from Refinitiv.

The year earlier quarter included a tax benefit of $1.3 billion.

New York-based JetBlue, the sixth-largest U.S. airline, also posted a fourth-quarter profit on Thursday above Wall Street estimates.

The profit beats, which mirrored solid results from Delta Air Lines and United Airlines earlier this month, boosted shares and eased concerns about the impact of slower global economic growth.

Shares of American and Southwest were each about 4 percent higher at mid-day, while JetBlue shares were up more than 5 percent, lifting the broader Dow Jones U.S. Airlines Index.

(Reporting by Ankit Ajmera in Bengaluru and Tracy Rucinski in Chicago; Editing by Nick Zieminski and Steve Orlofsky)

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