Air Transport World

Goodbye bankruptcy, finally.(FINANCE)

The second quarter was the first reporting period since the 2002 third quarter that ended with no US legacy carriers operating under Chapter 11 protection, a notable signifier that the world's largest air transport market has finally completed its long and painful slog through restructuring. With the emergence of Delta Air Lines and Northwest Airlines from bankruptcy during the quarter, the positive earnings trends of the past year and a-half crystallized with the 10 largest US airlines posting their best overall quarter since the heady days of the late 1990s. All 10 were in the black, posting a cumulative net profit of $5.39 billion, a major reversal from a cumulative net loss of $1.14 billion in the year-ago quarter.

Even excluding NWA and DL, which both profited from extraordinary one-time gains upon emergence, the eight remaining carriers posted a healthy $1.47 billion profit. Cumulative operating income for the 10 carriers was $2.95 billion, ahead 14.9% from last year.

However, as US airline executives were quick to point out, it's not quite time to pop the champagne corks. Continental Airlines Chairman and CEO Larry Kellner noted that the strong quarter was achieved despite a "tough domestic revenue environment." Indeed, the 10 carriers' overall revenue grew just 2.4% in the quarter and yield was flat at 12.9 cents. RASM lurched ahead 0.9% to 11.05 cents. The US market will "continue to exhibit low yields," Kellner projected, highlighting a major reason for the largest carriers' switch in primary focus to international flying. …

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