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Record numbers of travelers are flying this summer, but airlines want to win over a tougher crowd: investors.
Airline stocks have tanked while the broader market climbed to record highs this year as carriers' fuel bills rose faster than demand for seats. The NYSE Arca Airline index, which tracks 15 carriers, is down more than 14 percent this year, compared with a more than 12 percent gain in the S&P 500. Jet fuel costs, meanwhile, jumped more than 12 percent in the first half of the year.
That is increasing pressure on airline executives to prove to investors that they can grow profits with more expensive fuel, generally the companies' second-largest expense after employee salaries.
"It’s not a question of filling the airplane," said Joseph DeNardi, airline analyst at Stifel, adding that revenue per seat, a key industry metric, is improving but not "enough to offset how much fuel has increased."
Other problems are bubbling up, too. On Monday, Deutsche Bank lowered its rating on American, Delta and United to hold, citing not only fuel but geopolitical risks like a heightening tensions over trade between the U.S. and other countries, which it said could damp demand for lucrative corporate travel.
U.S. carriers are set to start reporting earnings next week, starting on with Delta Air Lines on Thursday. The airline, the largest by market capitalization, last month cut its profit forecast due to higher oil prices.
U.S. airlines have posted profits for the past eight years, the longest stretch in at least four decades, according to Airlines for America, an industry group.
Analysts are eager to see whether airlines plan to cut back on the supply of seats they offer to the market in the coming months. Fewer seats in the sky can give them greater pricing power and also help to curb costs. It's a nearly impossible task during the peak late-spring and early-summer travel months.
DeNardi said he expects airlines to trim schedules or slow growth down in the coming months, adjustments that he said will be well-received by investors.
So far this year, the industry that in 2016 enticed Berkshire Hathaway CEO Warren Buffett back to the sector that he once called "bottomless pit" for investors has not inspired much enthusiasm for potential shareholders.
"I think [what] everyone is really on the fence about is it really different this time, " said Robert Mann, Long Island-based aviation consultant who has worked at American and TWA, referring to previous years of bankruptcy and turmoil.
The pressure on shares make airline stocks relatively cheap compared with other sectors.
Each of the largest U.S. airlines — Delta, American, United and Southwest — have a price-to-earnings ratio of 8.6 to about 10, less than half of that of the broader S&P 500. The P/E ratio is one way to measure the cost of a stock. The lower the P/E ratio, the cheaper the stock.
Airlines are still expected to bring in profits this year, but the surge in fuel costs has dimmed hopes for growth.
The International Air Transport Association last month cut its 2018 profit forecast by 12 percent for the world's airlines and now expects them to generate $34 billion in profit this year.
Here are a few things to know and watch in their earnings, by airline: