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Friday, February 22, 2013

U.S. Airlines Experienced Lower Profit Margins in 2012

The top commercial airlines in the U.S. set performance records and experienced lower profit margins in 2012, according to a report released Thursday by industry trade group Airlines for America (A4A).

A4A’s report profiles the 10 airlines that reported full-year 2012 results—Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways—for a combined $152 million net profit; that’s a 64 percent drop from 2011 when those same 10 airlines reported a combined $418 million.

The report shows that profits per passenger enplaned have steadily dropped off since 2010 as the price of jet fuel continues to rise. In 2010 the same reporting airlines experienced profits of $3.18 per passenger, which dropped to 77 cents in 2011 and 21 cents in 2012.

“U.S. airlines eked out another year of meager profitability as expenses grew faster than revenues with record-setting fuel prices serving as a primary driver,” said John Heimlich, vice president of A4A. “The airlines spent some $50 billion to fuel their flights despite using half a billion fewer gallons in 2012 than in 2011 and last week the price of jet fuel hit its highest level in nearly a year. Fuel remains the airlines’ single largest expense.”

Despite the lower profits, nearly 82 percent of U.S. flights arrived on time—the third best year on record and the highest on-time arrival rate since 2003, according to the Department of Transportation (DoT). The department also reported the best year on record for baggage handling performance, with about three bags mishandled for every 1,000 domestic passengers.

“U.S. airlines delivered some of their best operational performance for on-time arrivals and baggage delivery in history, while continuing their stellar record of safety and investing in ongoing improvement to the travel experience for customers,” said Dan Elwell, senior vice president for safety, security and operations at A4A. More

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