Transportation

Airlines Will Have Record Profits For The Third Quarter

AirlineFinancials.com estimates the nine largest US airlines, starting next week, will collectively report $2.4 billion in profits from $33.3 billion in revenues. The average net profit margin is 7.2%. Assuming these projections are somewhat accurate, they would be an all…

By Douglas A. McIntyre
Published October 14, 2010, 4:55am ET · 2 min read

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AirlineFinancials.com estimates the nine largest US airlines, starting next week, will collectively report $2.4 billion in profits from $33.3 billion in revenues. The average net profit margin is 7.2%.
Assuming these projections are somewhat accurate, they would be an all time record profit and the 2nd highest revenue for any 3rd quarter.
For this report, the nine largest airlines are: Delta (NYSE: DAL), American (NYSE: AMR), United (NYSE: CAL), US Airways (NYSE: LCC), Southwest (NYSE: LUV), JetBlue (NASDAQ: JBLU), Alaska (NYSE: ALK), and Air Tran (NYSE: AAI). Note: United and Continental merged at the end of the 3rd quarter.

3rd quarter 2010 highlights (based on AirlineFinancials.com estimates):
  • First 3rd quarter since 2007 that all nine airlines will report profits.
  • First time since 2007 all nine airlines will have two consecutive profitable quarters.
  • Delta, Continental, US Airways, Southwest, Jet Blue, and Alaska will report record high 3rd quarter profits.
  • Southwest, JetBlue, Alaska, and Air Tran will report record high 3rd quarter revenues.
  • The estimated 7.2% average 3rd quarter profit margin would be the highest margin for at least the last 15 years.
Look-back reality:
  • Over the last decade, 2007 was the only other year the airline industry had a 3rd quarter profit.
Note: The 2nd and 3rd quarters are typically the best for the airline industry.
  • Since 2000, the nine airlines noted in this report accumulated over $2.4 billion in losses for 2001, 2002, 2005, and 2008.
  • After accounting for the $2.4 billion profit for the 3rd quarter 2010, the nine airlines noted here have accumulated $8.7 billion in Q3 losses since 2000.
The following chart provides 3rd quarter 2010 estimates for each airline.
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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 airline pilot for over 35 years. 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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