Tuesday, July 20, 2010

Airlines Had a Happy 2nd Quarter: United Reports Big Profit

Airlines continue reporting happy second-quarter results as business travel rebounds, boosting demand amid shrunken supply.

United Airlines today reported a $430 million profit for the second quarter, compared with a $321 million loss in the second quarter of 2009.

United's healthy earnings report comes one day after Delta reported a second-quarter profit of $467 million compared with a $257 million loss in the 2009 second quarter.

As noted here yesterday, the second quarter was a very good time for most domestic carriers, with planes nearly full and fares rising as demand picks up. Airlines have kept those planes full by reducing capacity -- cutting flights and retiring some planes to the desert.

At the same time, U.S. airline revenues have been boosted significantly by all of those extra fees they have been merrily slapping on passengers. ($785 million for checked bags and $553.9 million for reservations-change penalties in the first quarter, for example -- and that doesn't count fees for priority coach seats, upgrades, meals, blankets, etc. etc.)

By the way, even when they have great news to report, airlines seem constitutionally incapable of honestly providing information.

United today describes its $430 million second quarter profit as "an improvement of $751 million from second quarter of 2009." Delta used the same kind of wording to make its second quarter results look more swell.

Who do they think they're fooling? Reporters? ... The poor souls employed as airline stock analysts? (Well, maybe). ... Customers?

United coming up with that $751 million "improvement" required a wondrous kind of arithmetic that did a kind of back-flip to count the big fat loss of the previous year as a positive number. That is: $430 million profit + $321 million loss = $751 million "improvement."

Only Wall Street could love semantics like that.

Come on, airlines. Just state the facts without jive, please. The facts are good enough.


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