New Pilots

U.S. Airlines Realized $23 Billion in Net Profit Last Year

2016 03 14

Major U.S. airlines collectively realized net profits of $23 billion or 14 percent last year, bettering the single-digit profitability of 2014. Operating revenues of $158 billion remained flat, but the industry benefited from a 9.5-percent reduction in operating expenses, including lower fuel costs.

Reporting on the results of 10 publicly traded airlines, trade group Airlines for America (A4A) said on March 9 that the industry is improving its profitability while also retiring debt and returning money to shareholders. Air fares declined nearly every month, and were down 5.1 percent system-wide. “Falling fares were one of the big stories of 2015,” A4A chief economist John Heimlich told reporters in a conference call.

In 2015, the major U.S. airlines took delivery of 388 new aircraft. They had $86 billion in firm orders for new aircraft scheduled for delivery this year and beyond.

A4A said it expects air travel this spring will rise to its highest level ever; it expects 140 million passengers will fly during March and April, exceeding peak volume last year by 3 percent. Airlines “are increasing the supply of seats commensurately with the expected increase in demand,” the group said.

During the conference call, Sharon Pinkerton, A4A senior vice president of legislative and regulatory policy, said the industry faces “red flags on the regulatory front,” including taxes that would increase from 21 percent to 26.5 percent of the price of a round-trip ticket under the proposed Fiscal Year 2017 federal budget. That includes increasing the passenger facility charge that airports can assess, something A4A opposes.

Pinkerton also called on the Transportation Security Administration to better manage the passenger flow at security lines, saying that wait times of an hour or more are not acceptable. The agency’s “Pre-Check” expedited screening program, which is adding about 6,000 names a day, “isn’t moving as quickly as it needs to move,” she said. “We think it’s a management issue.”