Worried about Ebola and the economy, ISIS and Ukraine? U.S. airlines apparently aren’t, as a number of them have shrugged off the global concerns to post record profits for the third quarter.
American Airlines Group and Southwest Airlines both reported Thursday that they earned record profits in the three months ending Sept. 30.
For Southwest, it was a record for the third quarter. For American, no such qualifier was necessary.
United Continental Holdings, parent of United Airlines, and Alaska Air Group also reported record quarters as they shared in increased revenues generated by fuller airplanes and higher fares.
Airlines are also benefiting from lower fuel prices, although the bigger benefit will be felt in the fourth quarter.
Fort Worth-based American, thriving after its Dec. 9 merger with US Airways Group, said it had net income of $942 million in the three months ending Sept. 30, compared with $289 million in the same period in 2013.
That beat its previous record for a quarter, $864 million, set three months earlier in second quarter 2014. And that one beat the record set in first quarter 2014 of $480 million. Before that, one had to go back to third quarter 1998 when predecessor AMR Corp. posted net income of $433 million.
Excluding special items and charges, American said it earned $1.2 billion.
‘Best year ever’
“We expect the fourth quarter of this year will also be the best in the history of American and therefore obviously expect full year 2014 will be our best year ever,” American chairman and chief executive officer Doug Parker told analysts and reporters.
Dallas-based Southwest reported net income of $329 million vs. $259 million a year earlier. Excluding special items and charges, the carrier earned $382 million.
Its best quarter ever came in the second quarter, when it earned $465 million, or $485 million excluding items and charges.
“Our traffic and revenue trends were strong throughout the third quarter, generating a 4.5 percent year-over-year increase in unit revenues, despite a large percentage of our route system in development or conversion as we continued to transition AirTran flying to Southwest,” chairman and CEO Gary Kelly said in Southwest’s announcement.
The impact of the Ebola virus on airline bookings came up in almost every airline earnings call Thursday, with executives seeing little or no effect.
American Airlines president Scott Kirby acknowledged a brief dip in bookings that quickly went away.
“We have not seen a meaningful impact. If you followed us in the airline industry over the years, we sometimes have very short-term impacts from the headlines. And so on the day after the congressional hearings last week, when there was a media frenzy around it, we saw I think a measurable impact for one day and then bookings have snapped back to normal,” Kirby told analysts and reporters on a conference call.
Other airlines mentioned Ebola, sometimes in connection with other factors, but said it wasn’t hurting their business.
“As we move into fourth quarter, the demand environment remains solid, and strong revenue trends have continued,” Southwest chief financial officer Tammy Romo said. “We have not seen any noticeable negative impact on demand from Ebola or macroeconomic news.”
Asked later in his carrier’s call about Ebola, Southwest’s Kelly quickly summed up its impact on the airline: “None. Negative. Nada.”
End of Wright
Southwest and American executives also said they’ve seen good things for their airlines after the Oct. 13 expiration of the Wright amendment, which limited long-haul flights out of Dallas Love Field.
Kirby said American expects its passenger revenues per seat per mile in October to be up 3 percent on its long-haul flights out of Dallas/Fort Worth International Airport on routes that compete against nonstop flights out of Love Field.
“So even though it’s early, we are off to a good start in that competition,” Kirby said.
Kelly said Southwest’s 22 daily departures to seven cities beyond the Wright amendment area have had more than 90 percent of their seats filled with passengers. By comparison, the average Southwest flight in September filled 80.2 percent of its seats.
“We don’t launch new routes and have this kind of performance,” Kelly said. “Dallas is performing exceptionally well.”
Follow Terry Maxon on Twitter at @tmaxon.
