Airline Weekly Lounge

Whew! The busiest week of earnings season has us hustling. We kick off our around-the-world sprint with IAG, the airline group that is British Airways, Iberia, Vueling and more recently Aer Lingus. While IAG led Europe’s Big Three in profits, Lufthansa nonetheless posted its own all-time record, and Air France/KLM was no slouch. Still benefiting from its restructuring, Japan Airlines had fantastic profits, while All Nippon Airways had merely a fine quarter. We also check in on China’s Big Three, Icelandair, Aeromexico and Jet Airways. Plus, why is Spirit Airlines not all that concerned about its profit margin? That’s a lot of airlines in a single podcast.

Well that didn’t last long. American Airlines, the biggest carrier in the world, set a new quarterly profit record, with a $1.9b net profit in the third quarter. Of course, there are some technicalities at play here, but it broke Delta’s two-week old record. Maybe even more astonishing was United’s $1.7b figure. Has United finally narrowed the performance gap between itself and Delta and American? Meanwhile all of these airlines look like a bunch of pikers compared to Alaska Airlines. Southwest did just fine, but not as well as Volaris (by operating profit margin anyway). Plus we check in on Tigerair, Vietnam Airlines and Norwegian.

How did Delta achieve its record-breaking quarter? We touch on some of the root causes, including Delta’s push for cheap aircraft and near-perfect operations. Also, we discuss Delta’s plan for flat or zero capacity growth in the fourth quarter. And will Delta hold on to its shiny new earnings record for longer than two weeks? Meanwhile, contrary to a lot of other airlines, JetBlue is seeing an increase in unit revenues. And American Airlines pulled off its reservation system migration with aplomb. And lastly, we revisit the industry 30 years ago from the seat of a certain DeLorean.

Lufthansa is facing competition from Ryanair, Wizz Air, easyJet, Air Berlin, Vueling, Turkish Airlines, Emirates and probably your brother. Competition is not a new thing, but the severity is growing. Meanwhile, Air New Zealand resides in a small country in a location that’s not exactly the stuff of dreams to a network planner. But still it makes plenty of profits. How does it do so well? American Airlines is migrating US Airways onto AA’s reservation system—no small feat. Plus we talk about capacity increases by WestJet and Air Canada in Calgary, and Spirit and Frontier in Atlanta, and capacity decreases in Brazil by LATAM and Gol. And of course, we discuss the Jennifer Aniston ad.

In airline years, Southwest is certainly old enough to be put out to pasture. Instead, the massive airline is making money like never before. Could some of its contrarian moves, like no bag fees, actually be working? Or is it something else? Oil prices are driving low fares around the world, and that is driving traffic figures despite even some sluggish economies. One airline seeing remarkable traffic numbers is Volaris in Mexico. Meanwhile, Russia’s Aeroflot saw a surprise turn of events as the plug was pulled on its absorption of troubled Transaero.

Posting a $54m profit in its second quarter, Frontier Airlines has joined the ranks of America’s most profitable airlines. Frontier and America’s other ultra-low-cost carrier, Spirit, are both highly profitable and have big growth ambitions. As long as oil prices remain low, they should go far. Meanwhile, Norwegian is taking a stab at the low-cost longhaul game in the transatlantic market. Is this for real this time, or is Norwegian simply riding a tailwind of cheap fuel and a robust U.S. economy? Meanwhile, European carriers are bullish about their current quarter and the next one. And with the economy continuing to slide in Brazil, what does it mean for Azul’s longhaul ambitions.

Ethiopian Airlines is growing aggressively—and apparently profitably—while other African carriers are struggling. The airline’s centralized location seems to give it a big advantage over other African carriers. Meanwhile, Ethiopian doesn’t face a lot of competition within Africa. Have its fortunate location and smart business moves made it the biggest carrier in Africa? In India, where there are way too many seats flying around to easily do business, Indigo is nonetheless making money—perhaps even more than Ethiopian. We also discuss the U.S. Export-Import Bank and, of the world’s 100 biggest airports, which are the fastest-growing and slowest-growing (if not shrinking) … and why?

Can United Airlines’ new CEO overcome the carrier’s inherent challenges? United is big, powerful and, at the moment, very profitable. But it’s also underperforming Delta and American. When United and Continental merged, it was supposed to be “checkmate.” And so far it has been—but for the wrong team. Does it matter that the new CEO is not an airline guy? He’s not the first CEO with a railroad background, but still, all the other U.S. carriers have industry veterans at the helm. Plus, in this week’s Airline Weekly Lounge, we look at “hybrid” airlines, we digest our quarterly earnings scorecard and we discuss why Delta and American are—surprisingly—ending their interline agreement.

Canada may be a cold place, but right now its two major airlines are cruising along with comfortable profit margins. Still, what we’re seeing from WestJet and Air Canada is a far cry from what U.S. carriers are experiencing. Why is there such a disparity of results within North America? Also, we head to the Korean peninsula to talk about Asiana and Korean Air, both of which endured a number of challenges in their second quarter, including a MERS virus outbreak and a weakening cargo industry. And if that weren’t enough tumult, China is now devaluing its currency. Plus, we touch on Finnair, Jet Airways and Air Berlin.

The creditors of bankrupt Skymark Airlines chose All Nippon Airways (ANA) as its equity partner going forward. This of course leaves Delta—again!—without a dance partner in Asia. With that news, we take the opportunity to consider the condition of Japan’s long-time duopoly. What does this mean for Japan Airlines (JAL) and Delta’s Asia business? Virgin Australia is having a tough time while Philippine Airlines is having the time of its life. And in the Western world, Frontier Airlines is putting Humpty Dumpty back together again—profitably this time. We’ll explain in this week’s edition of The Airline Weekly Lounge.