Airfares fall as losses climb

Continental Airlines Inc., the top carrier at Newark Liberty International Airport, is offering fares as low as $760 round trip to Hong Kong and $474 to Zurich, Switzerland. Skiers can grab a four-day trip to Denver from Newark with an airfare of $238, even without a weekend layover.

An American Airlines fare sale includes trips between Chicago and Kansas City for less than $100 round trip and from John F. Kennedy International Airport to Barcelona for as low as $384.

"These prices are not to get people off the fence; these prices are to get people off the couch," said Rick Seaney, the chief executive of FareCompare.com. These are "the cheapest prices in really a decade," he said.

Southwest Airlines ran a sale over the weekend offering trips to almost everywhere it flies starting at $49 to $99 each way, for travel completed by March 11. American, Continental, United, US Airways, JetBlue and Delta matched the Southwest prices, officials at those carriers said.

It's not unusual for airlines to cut fares in the slow winter months, but this year they are cutting more and some of the deals apply for travel as far out as April, May and June, Seaney said.

He and other industry observers say that while the discounts may be a bonus for many consumers, they are a sign of distress for the airlines.

The industry's capacity cuts in response to last year's high oil prices may not have been large enough to keep up with falling demand, said Kevin Mitchell, chairman of the Business Travel Coalition, which represents corporate buyers of plane tickets.

With lower fuel prices, airlines might have been able to use the savings to repair battered balance sheets, he said.

"Instead, they are giving it away with these fare sales," he added.

The benefits of a huge drop in oil prices have also been offset in part by bad hedging bets carriers made on fuel.

Continental, which reports earnings today, has said it will take a fourth-quarter charge of $125 million to cover losses on a fuel-hedging contract with a Lehman Brothers unit that filed for bankruptcy.

Delta, the nation's largest carrier since it bought Northwest Airlines, said last week it lost $1.4 billion in the fourth quarter. United shed $1.3 billion.

American's parent AMR Corp. lost $340 million, and company officials said advance bookings were weak.

"Some think because fuel is so low we should be throwing a party," said Ned Raynolds, a spokesman for American.

"Even with a 12.5 percent capacity cut last year, with slack demand it's still difficult to fill seats and obtain economical fares," he said.

"Air travel is a great bargain right now," he said.

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