"We believe travelers are pushing back on high ticket prices," said airline analyst Helane Becker, with Dahlman Rose & Co.
"Bookings are very volatile, and they have been since March," Becker said in an interview. "People were glued to their TVs and concerned about the economy after the disaster in Japan."
US Airways' June revenue disappointed investors. That was partly due to an uncertain economy, but also because of strong competition from Southwest Airlines Co. and Delta at two of US Airways' key hubs, Charlotte, N.C., and Phoenix, Rodman & Renshaw analyst Daniel McKenzie said in a report.
Southwest and Delta have been growing and adding flights in Greenville-Spartanburg, S.C.; Atlanta; and Phoenix, which directly affects US Airways, McKenzie wrote.
Southwest's route network "overlaps more with US Airways" than any other airline, said analyst James Higgins of Ticonderoga Securities L.L.C. in a client update.
"We have believed Southwest was growing too aggressively, and see the softer-than-expected" fare pricing as the "clear culprit" for US Airways' lower revenue, Higgins said.
US Airways downward second-quarter earnings estimates sent Wall Street analysts back to the drawing table. "Management's guidance suggested second-quarter earnings per share of 50 cents to 55 cents a share vs. the current consensus of 92 cents and our estimate of 85 cents per share," said Morgan Stanley analyst William Greene.
Still, US Airways management said that compared with 2008, passenger-demand trends remained intact.
Major U.S. airlines, with the exception of American, expect to be profitable in the latest quarter and the full year.
Since 2008, airlines have learned to trim seat capacity - planes and flights. US Airways said it would reduce airplane seats 1 percent further in the second half of 2011.
"The recent drop in oil prices potentially opens the door for a great airline year," Avondale Partners L.L.C. analyst Bob McAdoo said in a client note.
Even if crude oil returns to $110 a barrel, "solid earnings should still be achieved in 2011," McAdoo wrote.
US Airways' reduced earnings outlook followed "similar disclosures" from American, Delta, and United, which "painted a softer second-quarter picture than originally expected," wrote JP Morgan Chase & Co. analyst Jamie Baker.
As for passenger demand, May was strong but June softer, Baker said.
"Certain carriers are suggesting a pickup in July trends," he wrote. "The supply picture should incrementally improve" after Labor Day, as airlines implement previously announced capacity cuts that will "help to mitigate" any revenue softness.
"With jet fuel coming down from recent highs, we believe airlines will discount tickets after August," analyst Becker wrote.
Southwest and AirTran Airways have already announced lower fares for travel Aug. 15 through Nov. 15.
"Airlines always discount in the fall. We definitely think airlines have to be careful about how discounted they get," Becker said.
Contact staff writer Linda Loyd
at 215-854-2831 or firstname.lastname@example.org.