Top 5 US Airlines Record Over $5 Billion in Profits in Three Months

Oct 28, 2017

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It’s earnings season for the US airlines, and this week each of the top 5 US airlines shared their profits for the July-September Q3 financial period. And there’s a lot to share.

Despite hurricanes, typhoons, earthquakes and low-cost carrier competition, the US airlines are still raking in cash. The top 5 airlines combined for over $5 billion in pre-tax profits across the three month period and have earned almost $13 billion in profits so far this year:

Airline Q3 Profit 2017 YTD Profit
Delta $1,805 $4,611
American $1,004 $2,659
United $980 $2,399
Southwest $791 $2,513
Alaska $427 $661
TOTAL $5,007 $12,843

Un-audited pre-tax GAAP profits in the millions of US dollars.

This spectacular levels of profits have become the new normal for the airlines, with American Airlines CEO Doug Parker saying in September that he believes AA will never lose money again. This is a spectacular claim when you look at the profitability (or lack thereof) history of the airline, which only netted to $1 billion in pretax profits from 1978-2013 combined:

AA pre-merger profits

However, despite historically good profitability, airline executives continue to complain about competition from overseas low-cost carriers and Middle East carriers. In the airline’s earnings call Thursday morning, Doug Parker again ranted about subsidies that the Middle East carriers receive. His claim is that the continued profitability of the airline depends on the Trump administration doing something to fix it.

Delta employees recently claimed that they “could all be out of jobs in a few years” if the Open Skies treaty wasn’t renegotiated. These complaints continue even as ME3 airlines continue to reduce service to the US and the US carriers’ lack of direct competition with the ME3 on any routes.

The positive of all of these profits: Airlines have been investing in their premium products. AA has finally killed off angle-flat seats on transcontinental flights and has started retrofitting aircraft with premium economy. Delta just introduced its first aircraft with the excellent Delta One Suite product. United continues its slow rollout of Polaris seating, with just 14 Boeing 777-300ERs with the product and one of 69 retrofits done:

Similarly, US airlines are upping their ground game. American Airlines is in the midst of rolling out much-improved Flagship Lounges and United’s delay-ridden Polaris lounges should start opening in 2018.

Hopefully steady competition between these airlines will prompt further investment for improvements, rather than airlines just hoarding their profits.

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