Major U.S. airlines reported $3.8 billion in net profit for the first half of the year, up from the $1.6 billion they reported during the same period last year, according to Airlines for America (A4A). A 6-percent increase in operating revenues drove the year-over-year improvement, the trade group said.
In a first-half 2014 financial briefing on August 21, A4A said the collective net profit reported by nine publicly traded airlines translated to a net margin of 5 percent, or 5 cents on every dollar of revenue. The carriers’ net margin during the same period of 2013 was 2.1 percent. A4A analyzed the results of Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit and United airlines.
The carriers were helped by a 2.4-percent reduction in fuel costs, which represents one third the cost of operating an airline, and “modest relief” in maintenance expenses and aircraft rents. Offsetting their operating revenue was a 2.2-percent increase in operating expenses, including rising wages and benefits, airport landing fees, terminal rents and aircraft ownership costs.
A4A chief economist John Heimlich in opening remarks said the cost of passenger fares has not kept pace with that of running an airline, leading carriers to fill more seats to avoid losing money. According to the trade group, airlines must fill approximately 80 percent of flights to break even. The industry’s passenger load factor from 2011 to 2013 was 79.8 percent, down from 81.3 percent during the period 2001-2010. Earlier this year, the Federal Aviation Administration reported airline system average load factor of 83.5 percent in 2013, which the agency said was a record.
Heimlich said the industry has recorded nine consecutive quarters of growth in the number of passenger seats departing U.S. airports. This year, U.S. carriers expect delivery of 317 new aircraft: 60 are regional jets, 235 narrowbody airlines and 22 widebody airlines.