North American carriers announced strong second quarter profits in July, with Delta Air Lines and American Airlines leading the pack.
Atlanta-based Delta reported a $1.58 billion operating profit on $10.6 billion in operating revenue, resulting in an operating margin of 15.1%. Net profit was $801 million.
The carrier continued its programme of tight cost control, with unit costs excluding fuel and special items growth flat, while increasing capacity 3% in the second quarter – something both American and United Airlines are attempting to replicate. This happened as it removed 50-seat regional jets from its fleet and decreased departures by 4%.
Newly enlarged American Airlines Group reported an operating profit of $1.4 billion on operating revenues of $11.4 billion. The net profit of $864 million after $1.2 billion in reorganisation and merger expenses was the airline’s highest ever in a quarter.
United reported an operating profit of $906 million on operating revenues of $10.3 billion, beating many analysts expectations but still lagging its peers. Chief executive Jeff Smisek called the profit “progress” but acknowledged that work still needs to be done at the carrier that has underperformed financially since its integration with Continental Airlines in 2012.
Alaska Airlines reported a $263 million operating profit on operating revenues of $1.38 billion, JetBlue Airways a $141 million operating profit on operating revenue of $1.49 billion and Southwest Airlines a $775 million operating profit on operating revenue of $5.01 billion.
All of the carrier’s reported strong bookings and expect a similar strong third quarter, except American which expects the impact of its decision to pull four-fifths of its 48 flights to Venezuela to reduce passenger unit revenue by 1.5 percentage points in the third quarter.
NORTH AMERICA AIRLINE NEWS SNAPSHOT: JULY
The continuing Venezuela foreign exchange situation finally pushed Delta and United to follow American and reduce their schedules to the county. Delta announced that it would cut its daily Atlanta-Caracas flight to Saturdays-only from 1 August and United that it would cut its daily Houston Intercontinental-Caracas flight to four-times weekly from 16 September.
Combined, the three carriers had nearly $1.09 billion in cash held in Venezuelan bolivars at the end of June. However, Delta reached a deal with the country to repatriate $15.5 million of the $194 million it had in bolivars at the end of July.
Southwest Airlines launched its first international service on 1 July, converting flights on its subsidiary AirTran Airways between Baltimore/Washington and Atlanta to Aruba, Montego Bay and Nassau to its own metal that day. The conversions mark the first of four waves that will see all of AirTran’s international service shifted to Southwest by 2 November.
Virgin America filed a prospectus for an IPO with the US Securities and Exchange Commission on 28 July. While it did not disclose the number of shares or price range, the move caps a positive period for the airline. It reported its first full year profit of $80.9 million in 2013 and won a hard-fought competition for two gates at Dallas Love Field that will allow it to expand service in the Texas city and access New York LaGuardia for the first time.
WestJet announced that it would acquire four used Boeing 767-300ER aircraft, just weeks after it disclosed that it would be adding widebody jets to its existing Boeing 737 fleet. The Canadian carrier plans to use the aircraft for flights to Hawaii after 90-days of proving runs on domestic routes. Boeing will supply the aircraft beginning in the third quarter of 2015.
NORTH AMERICA AIRLINE TRAFFIC: JUNE
Passenger load factor among North American carriers fell nearly half a point to a 86.1% as traffic growth fell just short of additional capacity.
North American carriers lifted their capacity just over 3% in June. Traffic as measured by RPKs, rose 2.6% over the same period. It was only the second month this year where traffic among the region's carriers failed to keep track of capacity - the only other month being March, when the later falling of Easter distorted the traffic picture.
Passenger load factor at the enlarged American Airlines Group was down nearly two percentage points in June to 85%. The group though did report passenger unit revenues up 6% in the second quarter and sharply improved profits over the same period.
Air Canada continued its rapid expansion, in part including development of its new Rouge unit operations, as traffic outpaced capacity to grow more than 10%. While relatively small carriers budget carriers Allegiant Air and Spirit, together with Republic Airways, also grew at double-digit rates, the majority of North American at low-single digit rates. But traffic fell at only SkyWest during June, though passenger numbers were down at Virgin America.
NORTH AMERICAN AIRLINE FLEET: JULY
Data from Flightglobal's Ascend Fleets database shows that North American airlines had 7,763 aircraft in service in July, over 30 more than in June. A little over 1,100 aircraft from the North American fleet remained parked in July