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Delta Posts Massive Profit, More to Come?

**Updated below: United reported a fairly solid profit of its own***

Delta kicked off second-quarter earnings season with a $467 million profit, up from a $257 million loss in the second quarter last year. That’s a pretty big swing, and the airline’s largest quarterly profit in a decade. So what happened?

How about a 17 percent spike in revenue, for starters? More specifically, passenger unit revenue (passenger revenue by available seat miles) increased by almost 20 percent, according to the Associated Press (AP), “driven largely by higher yields and occupancy.” Basically, Delta is getting higher fares and flying packed planes. That’s good for business.

As for the industry as a whole, the AP points out that “[airlines have] been benefiting of late from increased demand for seats, especially among business travelers. The fees they have been charging for checked bags and other services also have been helping their bottom line.”

The AP also credits first- and business-class sales, along with international travel, both of which are actually recovering faster than the industry as a whole. However, premium-class travel is still below pre-recession levels, while coach travel is 5 percent above.

So what does Delta’s earnings report tell us about the overall health of the industry? A corner may have been turned, but it’s still too early to tell. If anything, a slew of profits would validate the industry’s choices over the past few years, including massive capacity cuts and a wave of ancillary fees. And, unfortunately, any validation of those policies would preserve them, perhaps permanently. Delta projects minor capacity increases next quarter, but it will be a while before airlines are adding seats in significant numbers.

**Update, July 20**

United chimed in with a profit of its own, to the tune of $237 million. The earnings report painted a similar picture to the one we got from Delta, with soaring revenue driving the economic picture.

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