Money world

DALLAS — Southwest Airlines and the parent of United made money in the second quarter, but the profits were overshadowed Tuesday by more job cuts and pessimism over the severe slump in travel.

Continental Airlines reported a big loss and said it would cut 1,700 more jobs.

Passengers can expect another wave of higher fees in the form of increased baggage fees to sweep through terminals around the country, with carriers trying to offset revenue lost to lower fares and promotions.

Southwest Airlines Co. broke a string of three straight losing quarters by scratching out a small gain. But Chairman and CEO Gary C. Kelly said he couldn’t predict profit in the third quarter because of weak travel demand and higher fuel prices.
"I don’t think the worst is behind us," Kelly said. "I think the worst is ahead of us, and it’s primarily because of increased energy costs at this stage. … September is typically the second-worst month of the year (for air travel), which means it could be really bad."

Southwest, which has never laid off workers, announced that 1,400 employees — about 4 percent of the work force — took offers of cash and travel benefits to leave the company fast cash personal loans.

Continental Airlines Inc. lost $213 million and said it would slash about 4 percent of its workers. That’s on top of 1,200 cuts already announced at the Houston-based airline.

United Airlines parent UAL Corp. posted a surprising profit, thanks to fuel-hedging gains. Then it announced it will cut capacity on international flights another 7 percent this fall, reducing flights to match the lighter demand.

Since the recession deepened last fall, traffic on U.S. airlines has fallen every month compared with the year before. Business travel, the most lucrative kind for airlines, has been especially hard hit.

With high-fare business travelers replaced on many planes with bargain-seeking leisure fliers, average fares fell and led to declines in revenue that ranged from 8.8 percent at Southwest to 25.2 percent at UAL.

"Our success is highly correlated with the return of business travel, and we haven’t seen signs of that yet," said Continental President Jeff Smisek, who is set to become CEO in January.

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