The ten biggest US carriers garnered net earnings of $4.5 billion in the first three quarters of 2012 with a 4% net profit margin, up from $312 million with a 0.3% net margin in the same period of 2012, says Airlines for America (A4A) during a media conference today.
Operating revenues rose by 3.4% year-over-year at these carriers, says the trade association. The list includes Alaska Air, Allegiant Air, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines, United Airlines and US Airways.
Fuel continues to be a volatile expense and the US airlines’ largest on the balance sheet, making up 35% of operating expenses. However, the market has so far worked in airlines’ favour this year, with fuel expenses among the airlines dropping 3.4% during the nine-month period.
“That was a very important drop given that we see every other line item on expenses has increased year over year,” says John Heimlich, the trade association’s vice-president and chief economist.
Still, fuel prices have been especially volatile in the second half of 2013, Heimlich notes, with prices rising 39 cents between June and August and then declining again by 36 cents between September and October.
A 6.1% increase in depreciation and amortisation expenses and 5.9% increase in landing and terminal rental fees were among the line items that saw the biggest change compared to the first nine months of 2012.
US airlines have been improving their financial standing consistently since the last quarter of 2012, with capital expenditures more than doubling from $430 million per month to $965 million per month this year, says Heimlich. That money is going towards improvements to the passenger experience, such as interior refurbishments, improved booking software and the addition of services like in-flight internet.
Despite the improved profitability, nine of the 10 airlines in the study are considered non-investment grade by investors, notes Heimlich.
A4A forecasts that 25 million passengers will fly US carriers between 22 November and 3 December, with airlines adding about 2% more capacity during the peak time. This represents a 1.5% increase from 2012 figures, or about 31,000 passengers per day. The association expects load factors to exceed 85% on the three busiest days--27 November, 1 December and 2 December.