U.S. Airlines Report Improved Financial Results In 2013 To The Benefit Of Customers, Employees And Shareholders

Airline industry trade organization Airlines for America (A4A) has released its 2014 spring air travel forecast and 2013 results for U.S. passenger airlines, which delivered another year of strong operational performance and modest profitability.

A4A projects spring 2014 air travel to rise to its highest level in six years with a record number of passengers expected to travel internationally on U.S. carriers. Approximately 129.5 million passengers (2.1 million per day) are expected to fly U.S. airlines during March and April compared to 128.2 million passengers in 2013. This includes 17.1 million travelers (280,000 per day) on international flights – a new record for the industry.

“We attribute the increase in spring air travel to rising U.S. household net worth, an improving economy, and the affordability of air travel, which remains one of the best bargains for consumers,” said John Heimlich, A4A Vice President and Chief Economist.

The 2013 results reflect the financials of nine U.S. airlines that have released full-year 2013 results. They collectively reported a Generally Accepted Accounting Principles (GAAP) net profit of $11.6 billion or 7.8 percent of revenues. Excluding special items, net profit was $7.4 billion or 4.9 percent of revenues. At the same time, the airlines reduced debt, invested in their workforces, renewed their fleets and met customer demand by offering new and improved products, destinations and seats. These nine airlines ended the year with $71 billion in debt or 48 percent of annual revenues, having paid down $8 billion in debt from year-end 2012.

“The U.S. airline industry continued its upward climb in 2013, recording a fourth consecutive year of modest profitability, despite incurring more than $50 billion in fuel costs for the third straight year as well as increases in every single non-fuel expense,” said Heimlich. “In addition, airlines and their customers paid $19 billion in U.S. aviation taxes and fees.”

Heimlich further noted that airlines paid down debt and reinvested $12.4 billion in the travel experience for customers, and while U.S. airline profit margins rose from 0.1 percent to 7.8 percent year over year, they still remain below the Standard & Poor's 500 average of approximately 10 percent.

“While airline finances are improving, their profitability still lags the S&P 500 average and they remain focused on transitioning from accounting profits to economic profits, in which they earn their cost of capital over an entire business cycle.

“The airlines achieved an excellent operational year amid severe weather and other events, including air traffic controller furloughs resulting from the federal government’s sequestration that snarled air travel for customers last spring. These events served as reminders of the industry’s vulnerability to events outside of its control,” Heimlich continued. “The proactive and collaborative approach the airlines take to preparing for and responding to these operational challenges has allowed the airlines to more quickly reset and reaccommodate customers.”

Noting the external challenges the airline industry continues to face, Heimlich said that A4A continues to advocate for a National Airline Policy to address the tax, regulatory and infrastructure burdens that hinder the industry from growing and contributing to the economy at an even greater level. The National Airline Policy includes key pillars to enhance the customer experience by reducing delays and by rationalizing the federal tax and regulatory burden.

As part of its spring air travel forecast, today A4A also introduced infographics that break down spring air travel by the numbers and illustrate the unmatched value air travel offers when compared to other modes of transportation.

Additionally, A4A encourages customers to check in with their carrier before they travel regarding specific in-flight policies, including the use of portable electronic devices, as well as to sign up to receive check-in and flight status updates and information via available email, text or voice alerts.

FMI: www.airlines.org