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Airlines get cost-control; Next focus: revenue

Christina Medici Scolaro
Big Data Download
Airlines get cost-control; Next focus: revenue

During the past decade, the airline industry has been all about keeping costs under control, but now it’s time to start increasing revenue, said Helane Becker, managing director of Cowen and Company.

Traffic and price increases are the easiest way to increase revenue, according to Becker, but the question is, can the airlines stimulate demand without diluting pricing? Revenue in the third quarter is expected to increase between 1 and 3 percent, said Becker, and traffic is expected to grow 2 to 3 percent.

Becker focused on two carriers in particular: Delta, she said, is looking at the used aircraft market, which will save it money in the long run, according to Becker. She said Delta likes proven technology and value.

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Becker said United is a good airline because it has the most defensible route network in the world. Its hubs are split evenly between domestic and international airports. Yields are higher when carriers fly in and out of a hub.

Becker said it’s a great time to get in to the group. Becker is overweight the group.

A handful of airline companies will be reporting earnings this week, including Delta and United Continental.

Disclosure: Becker does not own stocks mentioned.

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