Cheap jet fuel, a by-product of the oil boom which has seen the USA become the world’s biggest oil and natural-gas producer, is working wonders for airline profitability.
The four biggest US airlines – American, United, Delta and Southwest – have just reported a collective second-quarter profit of almost USD 4 billion.
Despite the big profits, airline investors appear to have an eye to the future, foreseeing a period when times could be tougher.
Investors are hanging out for airlines to cut back on excessive capacity and push up fares, according to a recent Reuters report.
American Airlines, the world’s biggest airline and the last of the big four US carriers to report results, earned USD 950 million in the second quarter and still saw profits dive by 44%.
American’s revenues fell 4.3% to USD 10.36 billion for the quarter, with growing competition from low-cost carriers partly to blame. American is matching their prices to see them off, regardless of cost.
Written by Peter Needham