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US airline boom 'won't last': Embraer commercial chief

Some executives at US airlines insist that the industry has fundamentally turned a corner into profitability, but the head of Embraer's commercial aviation unit appears unconvinced.

"Airlines are utilities that are not designed to make $2 billion in a quarter," says John Slattery. "Trust me, it won't last."

Slattery, who spoke at the Routes Americas event in Las Vegas on 14 February, made his comments when asked what challenges are faced by the US airline industry.

Chief among those, he believes, is the infrastructure of both the USA's large hub airports and its secondary airports.

"When you... transit back through the United States, it's sobering," Slattery says. "It's sobering to land at JFK if you left Beijing or Shanghai, because of the quality of the infrastructure."

But also, smaller airports – including fields served by regional jets like those made by Embraer – must also keep modern, Slattery adds.

"If you don't develop the secondary and tertiary airports, the game is over," he says. "I think it will really hurt North America."

Another speaker at the event, Southwest Airlines chief revenue officer Andrew Watterson, disagreed. Many small US airports have "fine infrastructure", he argues.

"Some of these concerns seem like a paper tiger," Watterson says. "The scare tactic is a little bit lost on me."

Slattery's comments about US airline profits come after some in the industry expressed extreme optimism that, after mergers and cost-cutting, carriers had fundamentally changed from earlier years.

In April 2016, American Airlines chief executive Doug Parker went so far as to suggest US carriers might never again slip into the red.

"I think it is highly unlikely you are going to see losses again in this business," Parker said.

American reported a net profit of $2.7 billion for 2016.

In June 2016, Alaska Airlines chief executive Brad Tilden argued that "consolidations and improvements in airline cost structures have made us a better industry".

Tilden added: "I think margins for all of us, in the trough, are going to be positive."

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