The seven largest airlines in the United States reported that they earned a combined net profit of $876 million for the second quarter of 2011. It is noteworthy that six of the seven companies were profitable, reporting an 11% boost in combined revenue to $35.25 billion.
Given the state of the US economy, the Japan disaster aftermath, unrest in the Middle East and high fuel prices, achieving profitability demonstrates serious change for the US industry compared to even three years ago, said airline executives.
Even though it was profitable in the second quarter and expects to be profitable in the current quarter, Delta Air Lines plans to slash system capacity 4%-5% year-over-year in the fourth quarter. “We are just really focused on free cash flow,” CEO Richard Anderson explained. “We’re very focused on being certain that the flying we do creates positive cash flow. It’s that simple.” He added that the US industry “is probably three-quarters of the way there in terms of having a profile that will give a return on capital. The biggest pressure is fuel prices.”
United Continental Holdings led US carriers in the second quarter with a net profit of $538 million. American Airlines continued to be the US industry’s worst performer, incurring a net loss of $286 million in the June quarter, widened from an $11 million deficit in the year-ago period.