Vacation season benefits 3 major airlines

Planes crowded with vacationers helped three of the nation's largest airlines post second-quarter profits Wednesday, but costly jet fuel limited the gains and airline executives are fretting about what will happen in the fall if oil prices stay high.

American Airlines, the nation's biggest carrier, saw its profits rise but still fell short of Wall Street's expectations, blaming summer storms that caused flight cancellations and delays.

Delta Air Lines broke into the black two months after emerging from bankruptcy protection with a lower cost structure. And Southwest Airlines reported its 65th straight profitable quarter, but it earned 17 percent less than a year ago.

Raymond Neidl, an analyst at Calyon Securities, said the third quarter is shaping up to be stronger than a year ago, "even with higher fuel prices, because traffic is stronger and yields [revenue per miles flown by passengers] should be stronger."

Airlines have raised fares several times this year, but they also continue to sell lots of discounted seats that eat into profits. Southwest saw full-fare passengers drop to 27 percent from 33 percent a year ago.

American earned $317 million, or $1.08 per share, in the quarter, up from $291 million, or $1.14 per share, a year earlier. But analysts surveyed by Thomson Financial had expected $1.19 per share.

American shares fell 48 cents, or 1.7 percent, to $27.45 on Wednesday.

Delta cut billions of dollars in costs before emerging from bankruptcy protection in April. It earned $274 million, or 70 cents a share, in the second quarter when one-time items related to the bankruptcy case were excluded. That topped analysts' forecast of an adjusted profit of 59 cents per share. A year earlier, it reported a loss of $2.21 billion.

Delta shares rose 18 cents to $21.37 Wednesday.

Southwest earned $278 million, or 36 cents per share, down from $333 million, or 40 cents per share, a year earlier. Revenue rose to $2.58 billion from $2.45 billion a year ago.

CEO Gary Kelly said the company might miss its targets for 2007, "and that's not acceptable to us." But its results still topped expectations and its shares rose 13 cents to $15.72 on Wednesday.

IBM

Software division boosts earnings

Second-quarter earnings at IBM rose 12 percent and beat Wall Street forecasts Wednesday, largely on the strength of its software division and improvement in its services unit.

From April through June, the technology bellwether earned $2.26 billion, $1.55 per share, on revenue of $23.8 billion.

In the comparable period last year, IBM earned $2.02 billion, $1.30 per share, on revenue of $21.9 billion.

Not counting one-time charges, IBM earned $1.50 per share, beating the estimate of $1.47 expected by analysts surveyed by Thomson Financial. Analysts were expecting revenue of $23.1 billion.

Shares of IBM, one of the 30 Dow industrials, gained 31 cents to close at $111.08. In after-hours trading, shares jumped above $114.

eBay

Auction site's profit surges 50 percent

EBay reported Wednesday that second-quarter profit surged 50 percent, easily beating Wall Street expectations thanks to strong sales on online auctions, the automobile classified section and e-commerce sites such as shopping.com.

But analysts remained concerned about the declining number of items for sale on the site.

Revenue for the period ended June 30 was $1.83 billion, up 30 percent from $1.41 billion in the year-ago quarter.

Not including $79.6 million in stock-based compensation expenses and other one-time charges, eBay earned $471.1 million, or 34 cents per share, up 34 percent from a year ago.

On that basis, analysts polled by Thomson Financial expected eBay to earn $447.18 million, or 32 cents per share, on revenue of $1.78 billion.

EBay shares fell 26 cents in extended trading after losing 20 cents to $34.05 in Wednesday's regular trading session.

JPMorgan Chase

Bank scoops up more fees than ever

The good news is that JPMorgan Chase said Wednesday that second-quarter profit jumped 20 percent, as the nation's third-largest bank collected more investment banking fees than ever.

The bad news is that it said it tripled the amount of money it has socked away in case its loans go sour, signaling to investors that lending is getting riskier for the financial sector.

JPMorgan said net income totaled $4.2 billion, or $1.20 a share, in the April to June period, up from $3.5 billion, or 99 cents a share, in the same period a year earlier. Revenue rose 25 percent to $18.91 billion from $15.09 billion.

The results — driven by higher profits in investment banking, asset management, Treasury and securities services, and private equity — easily beat estimates and offset a profit decline in JPMorgan's retail banking business. Analysts surveyed by Thomson Financial had forecast earnings of $1.09 per share on $17.62 billion in revenue.

Shares of JPMorgan, a Dow component, fell $1.04 to close at $48.88 near the top of their 52-week range, but down from a May peak above $53.

Compiled from The Associated Press