Air travel demand is breaking records. Airline profits are not.
Record summer air travel demand isn't translating to record U.S. airline profits.
Record summer air travel demand isn’t translating to record U.S. airline profits. Carriers will have to answer for that disconnect when they report quarterly results this month.
Some airlines have forecast record demand, and in some cases, revenue. But higher labor and other costs have eaten into airlines’ bottom lines. To adapt to slower demand growth and other challenges, some carriers have slowed if not halted hiring compared with hiring sprees when they rebuilt after the pandemic.
And some airlines are facing delays of new, more fuel-efficient aircraft from Airbus and Boeing at the same time that a Pratt & Whitney engine recall has grounded dozens of jets.
Yet U.S. airlines have increased capacity, flying about 6% more seats in July than they did in July 2023, according to aviation data firm OAG. The expansion is keeping airfare in check, and stocks in the sector have fallen behind the broader market.
The NYSE Arca Airline Index, which tracks 16 mostly U.S. airlines, is down almost 19% this year, while the S&P 500 has advanced more than 16%.
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