JetBlue Airways, AirTran Airways, Allegiant Air and Alaska Airlines all recorded healthy profits. Alaska stood way out, with a quarterly profit of $88 million and an operating margin of a healthy 16.5%. Alaska saw a smaller drop in unit revenue than its peers—the airline has little exposure to overseas routes that have been hit hard by the deep recession. Maybe these numbers are a sign that good service wins when money’s tight.
JetBlue, AirTran and Southwest, which recorded a small loss of $16 million, generally do well in recessions when travelers look harder for value. The relative lack of long-haul international routes also helps those carriers.
American was the only major airline to have an operating loss in the quarter—and it came after the airline filled a record-high percentage of its seats with passengers.
Delta, United and Continental were able to scratch out positive operating margins around 2%. American has higher costs than its peers, and so the airline had losses even though its planes were nearly full. It cost American 12.29 cents to fly one seat one mile in the third quarter. Delta’s mainline flew each seat one mile for 10.54 cents; United’s mainline unit cost was 11.09 cents and Continental was at 10.41 cents.
The good news for American is that it did a lot of financing – pre-selling $1 billion worth of frequent flier miles and other borrowing – and has more than $4 billion in unrestricted cash to carry it through the winter.
Allegiant Air parent Allegiant Travel Co. concluded the third quarter, which it described as “our historically weakest,” with a $13.8 million profit that represented a nearly threefold gain over the $4.9 million surplus reported in the year-ago period.
“In the third quarter of 2008, we squeezed capacity hard to compensate for extraordinarily high fuel prices. This year we returned to more normal third-quarter aircraft utilization, which, in combination with a seven-aircraft increase in our fleet, resulted in high year-over-year growth against a backdrop of continued industry capacity cuts,” Chairman and CEO Maurice Gallagher Jr. said. “Notwithstanding our somewhat dramatic snapback of capacity, our unit revenue declines were largely in line with the industry and we produced a record third-quarter 16% operating margin.”
“We are cautiously optimistic that better times are in the offing. Scheduled fares, both airfare and ancillary per passenger, bounced off their lows of the second quarter,” Gallagher said. “It’s a little early to declare victory, but we certainly like the trend.”