April 14 (Bloomberg) -- Delta Air Lines Inc., American Airlines and other U.S. carriers may have combined for a fifth straight quarter of multibillion-dollar losses, reaching a “trough” as the recession crimped travel spending and fares.

The nine largest U.S. airlines starting tomorrow might report $2.3 billion in first-quarter losses, said Michael Derchin, an FTN Equity Capital Markets Corp. analyst. Helane Becker of Jesup & Lamont Securities projects a $1.9 billion deficit, while Hunter Keay of Stifel Nicolaus & Co. estimates $2.1 billion for the top five carriers.

The airlines’ capacity cuts weren’t enough to cope with passenger traffic declines of 8 percent or more each month of the quarter. The carriers slashed prices in hopes of luring back travelers, which eroded unit revenue, a measure of fares and demand, at least 17 percent last month at both Continental Airlines Inc. and US Airways Group Inc.

“I would be shocked if the first quarter isn’t the worst,” said Derchin, who is based in New York and recommends buying airline stocks. “As good a job as the airlines did ahead of time in reducing capacity, it still was not enough to hold fares in check with the horrendous economy.”

The quarter probably was the “trough” for the industry, with traffic and fares likely to rise in the traditionally busy summer season, Derchin said.

“We’re starting to see a sign of a bottom in some markets, such as the U.S. domestic market,” Chief Executive Officer Glenn Tilton of United Airlines parent UAL Corp. said in Tokyo last week.

Easter Shift

The losses are expected to widen from a year earlier, in part because the Easter holiday was in the second quarter in 2009 after occurring in 2008’s first quarter. The combined deficit for the nine largest carriers in last year’s first quarter was $1.4 billion excluding one-time costs.

American Airlines parent AMR Corp. reports tomorrow, followed April 15 by Southwest Airlines Co. Next week, Delta, UAL, Continental Airlines Inc., US Airways Group Inc. and JetBlue Airways Corp. release results.

The quarterly losses come after a combined annual deficit of more than $15 billion last year as the airlines cut jobs, parked jets, paid more for fuel and wrote down asset values. Excluding one-time items, their 2008 losses were $3.8 billion.

Stifel’s Keay estimates full-year 2009 losses of about $375 million for the largest five carriers, a revision from his January projection of a profit of about $3.5 billion.

Jesup & Lamont’s Becker estimates that the 10 biggest airlines will have a combined profit of about $1 billion for the year, less than half of her previous projection.

‘Less Worse’

Becker, based in New York, estimates that revenue for each seat flown a mile fell about 12 percent in the first quarter. She said she expects it to decline about 7 percent to 9 percent this quarter, drop 4 percent to 7 percent in the third quarter and be little changed for the final quarter.

“There are slightly less worse things to come” for the rest of 2009, Becker said.

Consumer spending and manufacturing numbers that signal broader economic expansion may start to rekindle business travel, said Robert Mann of R.W. Mann & Co., a consulting firm in Port Washington, New York.

“Absent that, we’re just going to be moving sideways, and sideways is not helpful,” he said.

The first-quarter losses underscore the need for additional capacity reductions after the summer travel season ends, Derchin said. The biggest carriers, which have cut more than 10 percent of flying, need to trim 5 percent to 10 percent more, he said.

Some of those reductions probably will be in international service “because things are just very stinky, at least on some of those routes,” Mann said.

Index Rebounds

Still, airline shares have rebounded since March 5, when the Bloomberg U.S. Airlines Index of 13 carriers reached a record low. The index has surged 61 percent from that date through today. This year, it has declined 37 percent.

“A sentiment rebound is likely to drive shares higher in the near term,” William Greene, a Morgan Stanley analyst in New York, said in an April 7 report.

Delta fell 51 cents, or 6.8 percent, to $7 at 4:15 p.m. in New York Stock Exchange composite trading, while AMR dropped 47 cents, or 10 percent, to $4.22 and Continental declined $1.31, or 9.9 percent, to $11.88. UAL slipped 71 cents, or 11 percent, to $6.05 in Nasdaq Stock Market trading. The airlines were down along with broader stock indexes after unexpected declines in retail sales and producer prices.

Lower Fares

While lower fares haven’t yet spurred business travel, discounts available this summer may revive vacation demand, Mann said. Some tickets to Europe are cheaper than they have been in five years, he said.

“People can’t not take vacations because the fares are so cheap and the deals are so great,” Jesup & Lamont’s Becker said.

The discounting may be working, at least for carriers that fly primarily in the U.S. Among major U.S. carriers, Southwest, Alaska Air Group Inc. and AirTran Holdings Inc. filled a greater percentage of seats in March than a year earlier.

Fuller planes will help the carriers post small profits in the second and third quarters, said David Swierenga, president of AeroEcon, an aviation consulting firm in Round Rock, Texas.

“For the year, I don’t expect much better than break even,” he said. “The carriers as a whole will be profitable this year, but it’s not going to be anything to write home about.”

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.