Transportation

Low Oil Prices Translate Into Higher Profits for Big 3 Airlines

Oil prices declined an incredible 52% over the past year, according to CNN Money, and trade around $49 per barrel as of this writing. This served as a boon to the bottom lines of the big three airlines, which saw lackluster top line results. These companies all saw significant decline in fuel costs, serving as a strong boost to their respective net incomes. Let’s take a look.

In its most recent quarter, Delta Air Lines Inc. (NYSE: DAL) saw its revenue increase a mere 0.8% year-over-year. However, its net income expanded a whopping 85.4% during the same time. This stems mostly from the 40% reduction in fuel costs year over year. Delta Air Lines actually saw a 3% increase in fuel consumption, but its average price per gallon went from $2.93 in the previous year to $1.70 per gallon.

United Continental Holdings Inc. (NYSE: UAL) fared worse on its top-line measure. In the most recent quarter, its revenue declined 4% from the same time last year. However, its net income increased 51.2%. Its reported aircraft fuel expense declined 32.1%, versus the same time last year, but United Continental saw its fuel consumption stay exactly the same. The company’s price per gallon went from $3.09 in the previous year to $1.98 this year.

American Airlines Group Inc. (NASDAQ: AAL) saw its operating revenue decline 1.7% in the most recent quarter, versus the same time last year. American Airlines saw its net income expand 94.2%. This company saw its fuel costs decline 42.2% while its fuel consumption decreased 2.1%. It reported a fuel price of $1.83, down from $3.10 the previous year.

Wall Street has high hopes for the big three airlines. Thomson/First Call has the analyst’s mean target price pegged at $59.30 for Delta Air Lines, representing a possible 30% increase from its current stock price. The mean target price of $77.90 per share for United Continental represents a 33% possible increase. Finally, for American Airlines the mean target price of $57.11 per share indicates a possible 33% increase from its current stock price.

ALSO READ: Customer Service Hall of Shame

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.