US airlines' shares jump as airfare data signals improving pricing power

Aug 12 (Reuters) - Shares of major U.S. carriers jumped on Tuesday after upbeat airfare data for July signaled improving pricing power for the industry, as airlines bring capacity in check to align with a soft demand environment.

Shares of legacy carriers United Airlines UAL.O, American Airlines AAL.O and Delta Air Lines DAL.N jumped nearly 10% each, while budget rival Southwest Airlines LUV.N gained 4% in afternoon trading.

Smaller peers Alaska Air ALK.N and JetBlue Airways JBLU.O rose about 10% each and low-cost carrier Frontier Group ULCC.O surged 22%.

Data from the Labor Department's Bureau of Labor Statistics on Tuesday showed airfares rose 4% in July after slipping 0.1% in June, marking their first increase in six months.

Uncertainty stemming from President Donald Trump's sweeping tariffs and budget cuts has prompted travelers to curb discretionary spending and reassess plans.

A soft demand environment, particularly from budget-conscious domestic travelers, had forced carriers to discount fares, squeezing margins despite summer typically being their peak money-making season.

Airlines have since been trimming seats on offer and readjusting routes to keep their pricing power in control and shield margins.

During their second-quarter earnings calls in July, major executives expressed confidence in the industry's ability to cut capacity and boost airfares in the latter part of the year.