DALLAS — The second quarter of 2024 has brought encouraging news for the U.S. airline industry, with major carriers reporting positive financial results. However, profitability still lags behind pre-pandemic levels, indicating an ongoing recovery process.

Alaska Airlines (AS) emerged as the surprise leader in profitability, boasting the highest operating margin at 16.4% and net margin at 11.3%. This performance comes despite AS not being among the largest U.S. carriers in terms of revenue.

Delta Air Lines (DL) claimed the top spot in terms of revenue, generating US$15.4 billion and securing the highest net income at US$1.3 billion. The Atlanta-based carrier also achieved the second-highest operating margin at 14.7%.

United Airlines (UA) and American Airlines (AA) followed, with operating margins of 13.1% and 9.7% respectively. Southwest Airlines (WN), whose 50-year-old low-cost seating model is about to change, reported the lowest operating margin among the major carriers at 5.5%.

Net Income Still Below Pre-pandemic Levels

All airlines showed positive net income and operating profit in their Q2 financials, signaling a robust rebound from the pandemic-induced crisis. However, when comparing Q2 2023 operating margins to those of Q2 2019, we see that all carriers are still performing below pre-pandemic levels.

The industry appears to be managing fuel costs effectively, with average costs per gallon ranging from US$2.64 for DL to US$2.84 for AS. Most airlines reported an 8-9% growth in Available Seat Miles (ASM), a key capacity metric, with AS slightly lower at 6%.

Finally, while the data for JetBlue (B6) and a combined AS/Hawaiian Airlines (HA) entry were incomplete, the overall picture suggests a sector on the path to recovery. However, the lingering effects of the pandemic, some wrong decisions, and potential economic headwinds may continue to challenge the industry's return to peak profitability.

Special thanks to Jay Shabat for sharing the comparative data of the Q2 2024 earnings.