Airline Earnings Take Upswing

Continental Airlines reported second-quarter earnings of $198 million, nearly double the $100 million earned in the same quarter a year ago. Full planes and higher fares offset soaring jet fuel prices. It was the latest sign of an improvement in airline financial performance. AMR, parent of American Airlines, and low-fare leader Southwest Airlines also both posted good second-quarter results that topped Wall Street's expectations. American reported second-quarter profits of $291 million, compared with $58 million for the same quarter a year ago. Posting its strongest earnings in six years, Southwest said its quarterly net profit rose to $333 million from $144 million for the same period a year earlier. The second quarter is typically very strong for the airline industry, but analysts now project that robust demand and higher fares will likely continue even past Labor Day. Southwest, one of the few U.S. airlines still "hedged" for much of its jet fuel also warned that in the long-term, as some of those hedging contracts expire, costs will rise. American and Continental also said fuel costs remain a challenge.

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