Issue No. 718

U.S. Airlines' Very Healthy First Quarter

Was it a good first quarter for U.S. airlines? In the aggregate: not bad.

The country’s nine largest publicly-traded carriers collectively earned almost $3b in operating profits, along with a solid 7% operating margin—once upon a time it was rare to see any black ink in the offpeak first quarter. The 7% figure, furthermore, was fractionally higher than what these same nine airlines earned in last year’s first quarter, which had the benefit of the Easter holiday. So no, last quarter wasn’t quite the bonanza U.S. carriers enjoyed in the same quarter of 2016, when they earned a supernaturally-high 16% operating margin; fuel prices were extraordinarily low at that time. But last quarter’s results did in fact reflect—once again—a healthy U.S. airline sector that’s leading the world in profit margins.

But were there concerns? Indeed, there were, with five of the nine airlines—American, Southwest, Alaska, JetBlue and Hawaiian—showing y/y margin declines. In some cases (Alaska), the decline was slight. In others (Hawaii), it was significant. Certain markets were under pressure. Certain market segments were under price pressure. And certain cost items increased.

Here’s are 15 key takeaways from Q1 earnings season (in no particular order), plus a look at what lies ahead for U.S. airlines in the weeks, months and quarters to come.

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