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Airlines Set To Fly To Near Record High Revenues For Second Quarter

Starting with Monday’s 2nd quarter earnings release by Delta (NYSE: DAL) and ending on July 29thwith Southwest (NYSE: LUV),AirlineFinancials.com estimates the nine largest US airlines will report an accumulated $1.77 billion in net profitson $31.5 billion in revenues. This updated…

By Douglas A. McIntyre
Published July 17, 2010, 8:59am ET · 2 min read

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Starting with Monday’s 2nd quarter earnings release by Delta (NYSE: DAL) and ending on July 29thwith Southwest (NYSE: LUV),AirlineFinancials.com estimates the nine largest US airlines will report an accumulated $1.77 billion in net profitson $31.5 billion in revenues. This updated estimate is at the high end of the May 18 projection when AirlineFinancials.com stated: The nine largest US passenger airlines will end the 2nd quarter with over $1.4 billion in profits. This could increase to $1.8 billion if fuel prices remain at or below current levels.”

Every major airline excluding American (NYSE: AMR), should be reporting significant profits for the recent 2nd quarter. American is estimated to be at or near break-even.
Leading the way in estimated 2nd quarter profit margins is US Airways NYSE: (LCC) at 8.17% followed by Alaska (ALK) at 7.8%, Southwest at 7.74%, Continental (NYSE: CAL) at 7.67%, Delta at 6.46%, United (NASDAQ: UAUA) at 6.25%, Air Tran (NYSE: AAI) at 5.65%, JetBlue (NASDAQ: JBLU) at 3.04%, and American at .03%. Average 2nd quarter profit margin for all nine airlines is estimated at 5.63%.
Note: “profit margin” is the ratio of net profits/total operating revenue. (See following charts for 2nd quarter 2010 estimated revenue, profits and margins.)
If these 2rd quarter 2010 estimates hold true, excluding 2007, they will be the highest 2nd quarter profits in the last ten years.
Further, 2010 industry revenues are estimated to be the 2nd highest in the history of the airlines topped only by 2008.
(See following charts for five year history of revenue, profit and margins. Delta includes Northwest.)
Conclusion- AirlineFinancials.com projects all of the airlines noted above will have strong revenue performance for the
remainder of 2010. Excluding American and assuming fuel prices remain in the $75-$85 per barrel price range, the airline
industry should see significant profits for the current 3rd quarter.
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Disclosure- The above opinions and comments should not be used to determine the worth of any stock or investment. At the time
of writing, the author and his family did not hold stock and/or derivative positions in any of the airlines covered in this article.
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Robert Herbst is an independent airline industry consultant. He is the founder of AirlineFinancials.com which provides
airline industry analysis and commentary for major US carriers. In addition to his consulting work, Mr. Herbst was a
commercial pilot from 1969 until January 2010. His aviation experience and financial background provide a unique
analytical perspective into the airline industry.

Contact [email protected] for any questions or corrections.

Douglas A. McIntyre

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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