Airlines 2nd quarter 2011

New 747-800 just passed it's final inspection flight

Delta = $198 Million
United = $538 Million
U.S. Airways = $106 Million
American = $-286 Million
Alaska = $84 Million
Southwest = $161 Million
Jetblue = $86 Million
Skywest = $1.6 Million

This quarter was marked again by very high oil prices.  Each company mentioned in their quarterly statements the adjustments they had to make to try and remain profitable.  Unfortunately, American lost money again in what is typically one of the two profitable quarters for airlines.  They have not made money now since 2007.  Don't ask me how they stay alive...

My company, Skywest, barely made money which is also unfortunate.  Management made a mistake and short staffed our airline this summer which incurred additional costs and the aquisition of ExpressJet from last fall still has lasting effects on the company.  Contratulations to everyone else who made money!  It used to be impossible to make money with oil above $50 or $60 per barrel but thankfully the industry has adjusted with oil now around $85 per barrel and hopefuly still falling.

Headlines in the industry the last couple of weeks were about the FAA shutdown that occured in late July.  The government had been granting temporary extensions of the budget for years while avoiding any negotiations.  The issues involved government subsidized service to rural communities as well as policy on how airlines could vote in unions.  Finally they decided to try and negotiate but could not come to terms so the FAA went unfunded and the authority of the government to collect taxes on airline tickets vanished.  This was a wonderful day for us in the industry.  This revenue collecting crisis for the government is now over after a couple of weeks.

Most airlines kept ticket prices the same and pocketed the money that usually would have gone to the government.  Some airlines, Spirit, Frontier, and I think one or two others passed the savings on to the consumer and dropped ticket prices by the same percentage they were being taxed.  Start cursing me now, but I would have also done what most airlines did and pocketed the money.  The more money in our pockets and the less in the government's is always better.  Those couple weeks meant a few extra million dollars for the airlines this quarter (3rd quarter) which is always needed to continue to assure profitability and growth.  Spirit airlines did report a substantial increase in sales by passing on the saving to you and I am happy for them.  They are in a unique market and I am glad it worked but I am also glad the majors took opportunity to make a few extra bucks.