How airlines scored record profits
The simple answer of why the airlines reported record profits: more passengers, ancillary fees and change fees, and higher fares combined to reach net incomes of US$1.6 billion in the third quarter.
Eight carriers reported third-quarter profits.
Just a year ago, the airlines were losing monehy.
“What a difference a year makes,” Southwest Airlines chairman Gary Kelly told analysts.
“Normally, such a boost in an industry’s earnings is driven by a combination of cost cuts and revenue increases. That’s not the case in 2010,” wrote the AP.
Airlines aggressively reduced their expenses and slashed their capacity and head counts beginning in 2008 as they struggled first with high fuel prices and then with a worsening economy.
With little more to cut in 2010, most airlines have seen their expenses creep upward.
"It suggests that we’re continuing to build momentum. … But we’re not seeing the levels of business traffic at Southwest that we had in ’07 and ’08," Kelly said. He added:
"We’re seeing some recovery in fares, but the number of corporate travelers is still lower than we’d like it to be. However, several recent surveys indicate that corporate travel volumes will increase in 2011."
By David Wilkening
David
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