Delta Leads as U.S. Airline Profits Surge to $12.7 Billion

 - May 6, 2014, 11:54 AM
Delta Air Lines led U.S. carriers in profit and baggage fees in 2013. (Photo: Bill Carey)

U.S. airlines reported net profit of $12.7 billion in 2013, improving from $98 million the previous year, the U.S. Bureau of Transportation Statistics (BTS) reported on May 5. This was the fourth consecutive year the industry reported net profits to the government.

In addition to after-tax net income, passenger airlines reported $12.5 billion in pre-tax operating profit, double the $6 billion they earned in 2012. The BTS, a branch of the Department of Transportation, compiled data from the quarterly financial and monthly traffic reports of 26 airlines.

The 10 largest airlines by the number of passengers carried reported most of the net and pre-tax operating profit—$11.7 billion and $10.3 billion, respectively. These airlines transported 83 percent of scheduled service passengers and collected 74 percent of their operating revenue in fares.

Atlanta-based Delta Air Lines dominated large carriers with $38 billion in operating revenue and $10.5 billion in net income. However, the net income figure includes $8 billion in “non-cash gain associated with the reversal of the company’s tax valuation allowance,” Delta said in January. At that time, the airline reported $2.7 billion in net income for the year, excluding special items. United had $38 billion in operating revenue and $654 million in net income, according to the BTS.

Total operating revenue of all passenger airlines last year was $199.7 billion, of which $120.6 billion, or 60 percent, came from air fare. Airlines collected $4.6 billion more in air fare than in the previous year. They collected $3.3 billion in baggage fees, representing 1.7 percent of operating revenue; and $2.8 billion in reservation change fees, 1.4 percent of operating revenue.

The total baggage fees airlines collected declined by $99 million from 2012. Legacy carriers collected the most in baggage fees, led by Delta ($833 million); United ($625 million); US Airways ($527 million); and American ($505 million). Spirit Airlines led a second tier, collecting $212 million, followed by Southwest ($143 million) and Allegiant ($112 million).

Airline operating expenses in 2013 were $187 billion, of which $50 billion, or 26.7 percent, was spent on fuel and $45 billion, or 24 percent, on labor. Fuel costs increased by $5 billion and labor by $7.8 billion over the previous year.