Airline Weekly Lounge

With a new year underway, we’re thinking about what will happen in 2019—always a dicey proposition. In this episode, we consider the prospects of airlines around the world. Some, like Aeroflot and Turkish Airlines, are facing huge opportunities. Others, like Jet Airways and South African Airlines, are facing grave challenges. Will the International Airlines Group make another offer for Norwegian?...

After pummeling each other for years, Icelandair and Wow Air agreed to a truce in the form of a merger. But the merger fell through. Now Wow Air may be finding comfort with serial airline investor Indigo Partners. What will that mean for both airlines? Aeroflot apparently finds comfort in being big. In fact, the Russian airline is looking to nearly double its fleet size in just five years. Meanwhi...

More and more people are traveling by air in Mexico, but Mexico’s airlines continue to struggle. All four of its main carriers had a disappointing 3rd quarter, which is historically peak season. VivaAerobus at least made a little money. Aeroméxico and Volaris barely broke even. And, Interjet’s numbers were simply alarming. Fortunately, oil prices have dropped so much that the outlook for airlines...

Of Europe’s “Big Three” airline groups, International Airlines Group (IAG) continues to significantly outperform the other two, namely Air France/KLM and Lufthansa Group. A big part of IAG’s success is simply British Airways’ coveted slot portfolio at Heathrow. But it didn’t hurt that pretty much everything else is working too. Still, Lufthansa navigated a difficult quarter operationally to delive...

American Airlines truly set itself apart from its peers in the third quarter—and not in a good way. AA posted a dismal 7.5% operating profit margin, nearly half of Delta’s 13.9% margin. But, with good reason, management remains optimistic. United, on the other hand, has plenty to smile about right now as it offset 100% of its rising fuel costs with rising revenues. Southwest didn’t have trouble wi...

Delta is doing a remarkable job keeping pace with rapidly rising costs. Sure, the airline’s third-quarter fuel bill rose 35% year over year. But rising revenues offset enough of those costs that Delta’s operating profit margin fell only two points. Meanwhile, what’s behind American’s recent troubles? Unfortunately, when American reports later in the month, it’s expected to be a much less happy aff...

Sun Country is largely missing out on the golden age that U.S. carriers have been basking in since 2015. In the past 12 months (ending with the second quarter, the most recent to be reported) all the U.S. carriers posted operating profit margins ranging from a healthy 9% to an excellent 16%—except for Sun Country, which delivered a distant 4% margin. Will Sun shine again? One airline enjoying the...

Qantas continues to romp. In the first half of 2018, the flying kangaroo posted a 9% profit margin—one point better than in the same period last year. And with that, Qantas is working on its fourth consecutive calendar year with double-digit margins. Despite more exposure to rising fuel prices, Air New Zealand still mostly kept pace. Virgin Australia, meanwhile, continues to miss out on Australasi...

Revenues and margins improved for Cathay Pacific in the first half of 2018, and the second half is usually better for Cathay. Still, will it be enough to lift the Hong Kong carrier out of its malaise? Fuel costs dented Singapore Airlines’ Q2 results, which were similarly mediocre to Cathay’s. VietJet’s soaring growth is helping it control unit costs and deliver solid profits. Also delivering solid...

Thanks to rising costs, it’s no surprise profits have declined at Air Canada and WestJet. But rising costs alone don’t explain how these Canadian carriers continue to consistently underperform their U.S. peers by a noticeable margin. Meanwhile in Europe, carriers like Ryanair, Aer Lingus, British Airways, Lufthansa, Swiss and others are putting up numbers very much like their U.S. counterparts. Un...

So far all U.S. carriers have reported shrinking year-over-year profits in the second quarter. But nobody’s margin decline was worse than that of JetBlue, which posted a 9% operating margin, down from 19% the year before. Allegiant had the best margin of the bunch, narrowly besting Southwest and Delta, both of which had shining quarters. American’s quarter was marred by its mishandling of basic ec...

Rising costs aren’t keeping Delta down. Delta overcame a 33% year-over-year increase in fuel costs to produce more than $1.2b in net profits (excluding special items) and a handsome 16% quarterly operating margin. In fact, despite the increased costs, Delta almost matched last year’s 18% Q2 margin. And the airline thinks it can return to improving margins by year’s end. Meanwhile, it’s hard to ima...

Frontier Airlines has had one of the most topsy-turvy histories of any airline, and its first-quarter earnings report was no exception. Sporting a wild animal on each tail, the airline has been soaring in recent years. In 2017, Frontier had the seventh best operating profit margin in the world. But something happened in Q1 2018, as its margin was cut in half. Meanwhile, Air France/KLM searches for...

Things haven’t gotten better in Mexico. Although Aeroméxico is at least coping better than its domestic competitors, all of which posted negative first-quarter margins in the double-digits. To make matters worse, construction of Mexico City’s much-needed new airport might be suspended as soon as July. North of the border, Delta and Southwest are seeing more cost pressures in the second quarter. La...

Despite a 29% year-over-year increase to its labor costs, Ryanair still posted a positive profit margin in the first quarter. Ryan’s eastern European counterpart, Wizz Air, meanwhile faced an even more daunting 43% rise in labor costs and handled it with equal aplomb. Scandinavian Airlines is plodding along, but so are a lot of other legacy carriers in Europe. For the moment, that’s okay. Doing mu...

For the moment, WestJet is the more profitable carrier. But in recent years, Air Canada has closed the gap and, in the first quarter of 2018, we see signs that Air Canada—after years of giving chase—might overtake its long-dominant rival. Emirates appears to be emerging from its malaise, but can it return to its former glory? AirFrance/KLM continues to struggle with its unions. Lufthansa had its b...

Revenues for U.S. carriers remained terrifically healthy in the first quarter, and everybody made money. But rising labor and fuel costs generally shrunk year-over-year profit margins. United, which continues to trail Delta and American in profitability, did a pretty good job of preserving its margin. Profits slid a bit more at American, but it was especially buoyant in Latin America, where AA is...

For a second straight year, Delta’s operating profit margin has fallen year-over-year in the first quarter. The reason for the decline, once again, is rising costs. The good news: Rising revenues—from nearly every corner of Delta’s network—propelled the airline to a solid 8% operating profit margin. One of the rising costs is, of course, fuel. Are fuel prices putting a damper on earnings overall?...

Numbers were put to the misery South African Airways has been experiencing when, last month, the airline finally reported earnings for its fiscal year ending in March 2017. Those numbers included a gut-wrenching negative 9% operating profit margin on the year. “Crisis” isn’t too strong of a word. What is SAA doing to turn things around? Elsewhere, it’s steady-as-she-goes for Cebu Pacific, which ag...

Air France/KLM and Lufthansa have a lot in common, including the fact that both distantly trail IAG (the parent company of British Airways, Aer Lingus, Iberia and Vueling) in terms of profitability among Europe’s Big Three airline groups. What does IAG have that the others don’t? Meanwhile, Virgin Atlantic turned in a profitless 2017 partly because of hurricanes. The fiesta has fizzled in Mexico r...

Life is good in Australasia—especially if you’re Qantas or Air New Zealand. Both carriers are enjoying a bit of a golden age that stems from good management and some macro tailwinds. Meanwhile, Virgin Australia, seemingly unable to catch those tailwinds, drifted toward a disheartening 2% operating profit margin in 2017. Scandinavia’s SAS, meanwhile, had a negative margin that really wasn’t dishear...

Not only does Ryanair keep on rolling, it seems to be gaining speed. Its full-year 2017 operating profit margin will almost certainly be the world’s best after every airline has reported. Ryan-like Wizz Air is also among the world’s profit leaders despite paying a lot more for fuel than last year. Korean Air and Asiana saw their China problem solved in Q4, and both received a lift from cargo and w...

With the bulk of U.S. airlines having now reported fourth quarter earnings, what has unfolded is largely a success story. 2017 wasn’t as good as 2015 or 2016, but it was generally good. Gone are the exhilarating margins of 25% and 27%. Instead we’re seeing healthy margins of 17% and 19%. Delta continues to set the pace for the Big Three. United continues to trail its peers, and that has led to som...

Delta’s 2017 profits were down slightly from the glory days of 2015 and 2016. But make no mistake: This airline is performing very well. Consider that fuel prices increased 23% in the fourth quarter, and the airline was still slightly more profitable in the quarter year over year. The transatlantic market is performing well. The Asian market is performing well. The South American market is perform...

Just a few years ago, the often-troubled SAS was merely inches away from seeing its light burn out permanently. Since then the airline has rallied. This past October the airline completed its best fiscal year in two decades. Is the airline merely surfing the buoyant European economy? Or is it building long-term success? Finnair is also enjoying a brilliant year. Icelandair is coping with growing c...