For Airlines, No Recovery Beyond the Labor Day Horizon

Airline shares have rallied ahead of Labor Day, an anticipated turning point for the troubled industry when many carriers will begin slashing seat capacity to match the drop in passenger demand. Investors are hoping capacity cuts will allow airlines to jack up ticket prices and reverse declining revenue. But the plan could falter because business travelers, the industry's traditional bread and butter, have yet to return even as the recession winds down. "We've seen some improvement in recent trends for load factors and pricing, but I think the bulk of that is being driven by the leisure traveler," said Matt Jacob, an analyst with Majestic Research. "But the business traveler, those who buy close to booking and pay a premium price, that section of the business has continued to be weak.

Source: Christopher Hinton, MarketWatch