Publicly traded airlines, railroads, trucking companies and ocean carriers based in North America are showing improved results despite expectations for a sluggish U.S. economic recovery, Standard & Poor’s said in a report.
The companies’ first-quarter results were “mostly encouraging,” the report said, but it warned that economic growth is expected to slow in the year’s second half.
S&P said an expected slight decline in oil prices should help carriers but that they could be hurt by any spread in Europe’s credit and currency problems. The report also said any serious crisis in capital markets could impede or add to the cost of companies’ efforts to raise debt or equity.
The report said airlines’ operating results are improving as revenue growth outweighs the impact of higher fuel costs. But it noted the improved results reflect weak comparisons from last year and that most airlines lost money in the first quarter.
Railroads enjoyed volume growth during the year’s first half and should be able to handle increased traffic without a commensurate increase in expenses, the report said.
Trucking’s outlook is mixed, with continued strengthening expected in the truckload sector but weakness among less-than-truckload carriers, primarily because of excess capacity that has produced aggressive price competition.
Transportation equipment lessors are showing modest improvement and demand for short-term truck rentals, historically a leading indicator of economic changes, is expected to remain strong throughout 2010. Demand for railcars also has increased, and railcar lease rates are expected to rise further this year amid tight supply and demand.
-- Contact Joseph Bonney at firstname.lastname@example.org.