Jul. 27--As air carrier after air carrier reported quarterly earnings this month, almost every executive said the airline business seems to have hit bottom in May and stabilized.

But those sentiments should not be confused with soaring optimism, which has been in short supply around airline executive offices.

The problem with hitting bottom, executives told industry analysts, is that the airlines are still on the bottom.

"We don't know when a recovery will come, and there's a lot of uncertainty about the economic environment," Continental Airlines Inc. president and chief operating officer Jeff Smisek said.

While unit revenues seem to have stabilized, "we don't know how long we'll bounce along the bottom, and what the rate of climb that will be," he said.

"Our success is highly correlated with the return of business travel, and we haven't seen signs of that yet. So while things appear to have stabilized, they've stabilized at low levels," Smisek said.

US Airways president Scott Kirby said there's "some anecdotal evidence that business is improving, or stated more accurately, at least it is not as bad as it was."

For example, US Airways saw its revenue from corporate contracts down 30 to 35 percent in 2009 through May. But it was down only 28 percent in June and 22 percent in July. In addition, unit revenues were improving in business markets like US Airways Shuttle, Kirby said.

Southwest Airlines Co. chairman and chief executive Gary Kelly said that the carrier has "seen some stability for roughly 90 days -- May, June, July."

"But the issue is business travel," he said. "There is no reason to believe -- based on history -- that business travel will pick up sharply anytime soon. It certainly didn't in '91. It didn't in 2001.

"This recession seems to be much deeper and could be much more prolonged, and you know the job picture is still not bullish, it's bearish," Kelly said.

Last year, the problem for carriers was soaring energy prices, and most airlines slashed their capacity to get rid of money-losing flights and to match the supply of seats to demand.

Many analysts believed that the sharp drop in crude oil and jet fuel prices in the second half of 2008 would bring big profits for carriers in 2009, particularly with the reduction in airline capacity.

But the economic crisis last fall and the continuing recession have damaged travel demand far more than industry pundits expected. The airlines have kept their airplanes relatively full, but with lower-paying leisure travelers lured by cheap fares.

In second quarter 2009, the nine largest U.S. carriers combined spent $6.09 billion on fuel, or $4.93 billion less than in second quarter 2008.

But their operating revenues declined even more to $26.56 billion, down $6.73 billion, in second quarter 2009.

The only carriers among the group to post net profits excluding special charges and one-time charges have been low-cost carriers, particularly those focused on leisure traffic: Southwest, JetBlue Airways Corp., AirTran Holdings Inc. and Alaska Air Group Inc. A number of airlines said that the stronger-than-expected bookings in July seem to holding into August. But they are very concerned about what happens after Labor Day.

"It's a very tough environment, and we're just going to have to wait and see how it shapes up beyond the summer," AMR Corp. chief financial officer Tom Horton said.

As analysts have been listening, they've been hearing gloomy airline executives describe a summer travel season that's been stronger than expected.

"We know the baseline is poor, and we understand the substantial uncertainty the business faces," analyst Gary Chase of Barclays Capital wrote last week. However, "we still suspect that many underestimate the potential for recovery and the magnitude of positive impact it could have from an earnings and liquidity standpoint."

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