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Oct 15

Why I’m Thrilled That Delta Made $2 Billion Last Quarter

In the third calendar quarter of 2016, Delta Airlines made almost $2 billion of pre-tax income. And the only thing that would have made me happier is if they had made $3 billion.

Why Profitable Airlines Are Good

delta

The gold color is for all that money they made

There are few things in the country that are more American than disparaging airlines. I mean, Mom and apple pie are great, but complaining is so much more gratifying. Who here hasn’t once stepped off a plane swearing never to fly a particular airline again, only to be assuaged by a fare sale?

But the truth is, airlines are publicly traded companies with real shareholders, and they owe a fiduciary responsibility to their owners. Viscerally, that makes sense. Most businesses try to maximize their own profitability and we accept that fact.

But we don’t have to like it. For whatever reason, the concept of an airline making money tends to tick off a lot of people. And I can understand why. Flying is not exactly a pleasurable experience these days. How many cases of air rage have you read about in the past year? Now, think of how many cases you read about 15 years ago. The experience, at least in terms of comfort, has gotten worse.*

But Think Of It This Way…

Those TVs and that cool purple color? Thank profitability.

Those TVs and that cool purple color? Thank profitability.

Profitable airlines have one thing that unprofitable ones don’t: Money. And it takes money to invest in a product that is better to fly. Yes, airline seats are tight, but airlines have recently started investing in “Economy Plus” products, They tried this in 2001, but were forced to abandon it after 9/11, when solvency became an issue. Bankruptcies resulted in fewer staff members, less customer service, the elimination of meals, added fees, etc.

On the other hand, the past 3-4 years have seen unprecedented profitability. And what are we getting out of it? New planes. IFE at every seat. The return of food to economy. Even more services for the premium portion of the cabin. Okay, the Slimline seats and fees are still nasty, but remember, publicly traded companies.

The Bottom Line

You don’t have to love the airlines, but you probably do have to fly them. They’re a bargain. You can fly across the country for $250 in five hours. And the average airfare has gone down since deregulation, at least on an inflation-adjusted basis. Happy airline, happy life.


*I’m talking about economy class here. There’s little question that the premium classes have gotten better.

 

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