Air Transport World

Let the good times roll: U.S. airlines continue to do well on the profit front.

U.S. airlines continue to do well on the profit front

The U.S. airline industry remains on course for a year of record or near-record earnings as most major carriers reported strong results for the second quarter, ended June 30, generally on the back of better unit revenue production, higher load factors and effective cost containment (see tables). Operating and net margins also were improved, with several airlines achieving 10% operating margins and/or 5% net margins on sales.

The down side to this good news is that it will make persuading the Clinton administration to jettison the 4.3 cents-per-gallon jet-fuel tax, scheduled to take effect Oct. 1, doubly difficult. The administration is arguing that the airline recovery will not be weakened by the tax, although this is disputed vociferously by the industry and Wall Street, which estimates it will add $510 million to the industry's annual fuel bill, with $127 million of that coming in this year's fourth quarter. …

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