Air Transport World

Soaring profits, flat capacity: US airlines are wary of adding seats even as they post impressive profits.(Finance)

While US consumers are clearly still jitter y about the nation's fragile economic recovery, the country's major airlines believe they've found a formula for operating profitably even in a slow-growth environment: Stay disciplined on capacity, develop new sources of revenue via ancillary charges and keep nonfuel costs under control.

With Delta Air Lines leading the way with a $467 million second-quarter profit, the US's nine largest carriers posted cumulative net income of $1.45 billion for the three months ended June 30, turned around from a net loss of $556 million in the year-ago period. DL CEO Richard Anderson characterized the revenue environment as "good but not yet great," yet still predicted the airline would be "solidly profitable" for the full year.

US airline executives discussing second-quarter results insisted the profitable period won't tempt them to raise capacity. "One profitable quarter does not necessarily mean a sustainable long-term business model," US Airways Chairman and CEO Doug Parker told analysts and reporters. Adding capacity in the US market now would "defy logic," he said.

US Major Airlines Financial Results *
Second Quarter ended June 30, 2010 (in millions)

                    Operating Revenues    Operating Profit

                      2010       2009       2010    2009

AirTran Holdings      $ 701      $604        $68     $66
Alaska Air Group        976       844        110      67
AMR Corp. … 

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