Granted, year-over-year the airlines did have easy revenue comps for August — considering the Heathrow terror incident ripples the industry experienced last year.

But even with that give-me, as more and more airlines report their August traffic numbers, the news looks even better than anticipated.

This week both Mike Linenberg, analyst with Merrill Lynch, and Jamie Baker with JP Morgan, upped their third quarter estimates on Continental Airlines — based on the airline’s August traffic and RASM numbers.

Today, Lehman Brothers’ Gary Chase said in a note:

“Traffic reports this week have pointed to August revenue performance that is better than expected.  We believe the combination of slowed capacity growth, easier comparisons, as well as continued strength in underlying demand is driving the better than expected revenue results. CAL disclosed Tuesday that August consolidated RASM increased 6.5% to 7.5% while mainline RASM increased 8% to 9%, both well ahead of our expectations (5% to 5.5% consolidated, 6% to 6.5% mainline).  LCC disclosed August RASM increased over 5%, in line with our expectations for the guidance (but hard to know just how strong given a wide range in how LCC discloses results, typically 5 percentage points on RASM). JBLU today disclosed August RASM increased 15%, also well above our expectations.  DAL also added some color, commenting on strong August revenue performance.  We expect that ATA RASM results, expected around September 20th, will also point to strong revenue performance in August.”

He concludes:

“We expect September RASM will remain strong, but likely be lower than August comparisons as we move into a seasonally weak month.  We continue to model a slowing in underlying revenue trends in 4Q, but remain positive on the group

given significant cash generation, minimal capacity growth for the foreseeable future and little capital expenditure, particularly for legacy carriers.”