Delta Air Lines, Inc. (DAL), Southwest Airlines Co. (LUV): What To Watch For

Foolish bottom line
Airline bulls can hope that the month of April was the “exception that proves the rule” for U.S. airlines. Despite consolidation, capacity discipline broke down, with only one of the five largest carriers trimming its capacity compared to 2012. This contributed to the industry’s worst monthly unit revenue performance in years. The airlines that expanded capacity the most were the hardest hit.

April’s results should serve as a wake-up call for airline executives. Capacity discipline does not just “happen” because of consolidation. Airlines need to continually assess the demand environment and reduce or eliminate service on routes that are not contributing to profitability. Investors should keep a close eye on industry results for the next several months, to see if the airlines are mending their ways.

The article Airlines Disappoint in April originally appeared on Fool.com.

Motley Fool contributor Adam Levine-Weinberg is short shares of United Continental Holdings (NYSE:UAL) and is long Sep 2013 $33 Puts on United Continental Holdings. The Motley Fool recommends Southwest Airlines.

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