US airlines eke out US$12 million profit in first quarter

Wednesday, June 30, 2010

US airlines in the first quarter of 2010 managed to eke out a US$12 million profit, mostly from “ancillary” services like checked baggage fees, pet transportation fees and more.

Compared to the first quarter of 2009, checked baggage fees soared 33% to $769 million. The airlines also reaped $554 million in reservation change fees, and made $534 million from other ancillary sources; such services (including checked baggage fees, reservation change fees, etc.) made up 21.7% of Spirit Airlines’ income, the highest in the industry.

The US airline industry is made up of 21 carriers, according to the U.S Department of Transportation.

The five “network” or legacy carriers—including United Airlines, Delta Air Lines, Continental Airlines, American Airlines and US Airways—continue to struggle and posted a $163 million loss as a group. Delta Air Lines had the highest profit, at $107 million, while American Airlines was at the other side of the carriers, with a $322 million loss.

Low-cost carriers fared better, posting a $115 million profit as a group, with Southwest Airlines having the largest profit, at $54 million, while Allegiant Air’s profit margins were the highest of the budget carriers at 20%. Regional airlines made a $60 million profit.

The world’s airlines expect a US$2.5 billion profit as a whole, despite an earlier forcast of a loss. However, many investors and groups, such as the International Air Transport Association (IATA), are somewhat doubtful of this number, as oil prices are expected to remain volatile, leading to the possibility of high prices cutting into airlines’ profits.