US majors report over $1 billion 3Q profit

Continental Airlines 777-200. Courtesy, CO

This year's fuel price spike prevented US major airlines from improving profitability year-over-year in the third quarter, but the country's seven largest airline companies still earned $1.09 billion in combined net income for the three months ended Sept. 30, ATW calculated.

That was down 45.1% from last year's $1.98 billion third-quarter net profit but an impressive result given a 14.9% year-over-year rise in costs to $34 billion driven mainly by higher fuel prices. Revenue grew 9.7% to $36.5 billion and operating profit was $2.49 billion, down 29.5%.

All seven airlines were profitable on an operating basis and five of the seven earned a net profit; the exceptions were a struggling American Airlines (AA) and, owing to fuel hedging charges, Southwest Airlines (SWA). It's not hard to see why the carriers stayed in the black: Capacity and non-fuel costs barely grew year-over-year and load factors remained extremely high.

The seven carriers' collective third-quarter capacity lifted just 0.7% compared to the prior-year period to 238.99 billon ASMs while traffic heightened 1% to 203.41 billion RPMs, producing a load factor of 85.1%, up 0.3 point. Average yield improved 7.9% to 14.58 cents. CASM jumped 13.4% to 13.03 cents even as CASM ex-fuel increased only 1.5% to 7.92 cents. 

United Continental Holdings (UCH), parent of merger partners United Airlines (UA) and Continental Airlines (CO), posted a best-among-US majors third-quarter net profit of $653 million (ATW Daily News, Oct. 28).