Newspaper article The Christian Science Monitor

For Large Airlines, America's Skies Getting Friendlier ; Profits Are Up for the Big Carriers for the First Time since 9/11, but So Are Fares

Newspaper article The Christian Science Monitor

For Large Airlines, America's Skies Getting Friendlier ; Profits Are Up for the Big Carriers for the First Time since 9/11, but So Are Fares

Article excerpt

A host of small strategies have yielded one big turnaround for the long-troubled US airline industry.

They've forged alliances, cut back on flights, and skimped on peanuts. They've subtracted benefits for unionized workers and added a few feet to their wingspan with fuel-conserving "winglets."

The result: The major US carriers are now beginning to turn a profit, collectively, for the first time since the 9/11 terrorist attacks.

The return of profits doesn't guarantee smooth skies ahead, but it does mark an important milestone for companies such as United Airlines, American Airlines, and US Airways.

"The airlines have made tremendous progress," says Vaughn Cordle, an industry analyst at Airline Forecasts in Washington. The industry "is on the cusp of a major recovery."

How far it goes will depend on several factors, including the economy, the price of oil, and whether the airlines can avoid revisiting the mistake of expanding service too much in good times.

But for now, those long-awaited good times are here.

Despite soaring fuel costs, the industry posted a collective profit of about $1.5 billion, pretax, for the months from April to June, according to the investment firm Merrill Lynch in New York.

United Airlines, which a year ago was in bankruptcy proceedings, announced quarterly earnings of $119 million this week, following even larger gains at US Airways ($305 million), American ($291 million), and Continental ($198 million).

Two other big firms, Northwest Airlines and Delta Air Lines, have yet to report results because they are now in bankruptcy.

But the theme is clear. The old-line carriers suddenly have numbers that aren't that different from the newer, low-cost airlines that have been eating away at their market share since the industry was deregulated in 1978. Southwest Airlines, long the nemesis of the other big carriers, posted a second-quarter profit of $333 million.

Some analysts expect the strong financial performance to last well into next year.

For consumers, the news has a bittersweet edge. Fares have climbed on many routes, planes are more crowded, and a hot meal is something you buy in the airport before the flight. …

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