updated 10/4/2006 3:29:42 PM ET 2006-10-04T19:29:42

Some U.S. airlines posted increases in year-on-year traffic in September, as a dip in air travel demand from tighter security measures implemented in August appeared short-lived.

Of the major carriers that so far this week have reported their September traffic, UAL Corp’s United Airlines, Continental Airlines, and low-cost carrier Southwest Airlines saw increases. Data show, however, that airplanes were a little less crowded in September 2006 than they were a year ago.

The increases in traffic are a clue that third-quarter airline earnings will be strong, said airline consultant Michael Boyd.

“Nothing but good news, particularly for comprehensive network carriers,” Boyd said. “Everything points to a recovered airline industry and a strong airline industry.”

“We think 2007 is going to be a banner year,” he said.

The airline industry saw the early signs of rebound this year after suffering from overcapacity, low-fare competition and soaring fuel prices.

In August, however, the Transportation Security Administration banned liquids and gels, including toothpaste and shampoo, on carry-on bags after British authorities said they foiled a plot to blow up planes using liquid explosives.

The restrictions on carry-on luggage, since eased, triggered a decline in demand for air travel.

United, Continental, and Southwest all reported increases in traffic in September, while leading carrier American Airlines, a unit of AMR Corp., bucked the trend, posting a 1.4 percent decrease in traffic.

AMR’s feeder carrier American Eagle, however, saw its systemwide traffic increase by 3.1 percent in September.

But load factors eased for United, Southwest, and American as increases in the number of seats for sale outpaced the rise in traffic.

Lower load factors could impinge on airlines’ abilities to raise prices. Earlier this year, tight controls on capacity increases helped airlines raise fares to offset rising fuel costs. Fuel prices have since retreated, which should boost profitability at most carriers.

Experts are generally upbeat on the earnings prospects for airlines in the third quarter.

Calyon Securities analyst Ray Neidl said in a research note Wednesday said he has lowered his estimates somewhat but expects the industry to earn $1.5 billion in the third quarter. Neidl predicted industry earnings of $1.3 billion for 2006.

For AMR, Neidl lowered his third-quarter earnings estimate to 80 cents per share from $1.13 per share. Neidl forecast UAL earnings at $1.74 per share from $2.03.

Copyright 2012 Thomson Reuters. Click for restrictions.


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