The financial picture for some of the nation's major air carriers appears to be improving. United Airlines, which emerged from bankruptcy protection earlier this year, says it is making money again after six years of losses.
U.A.L., the parent company of United Airlines, is reporting a second quarter net profit of $119 million. That reverses last year's trend when the U.S.-based carrier lost more than $1.4 billion from April to July.
Industry analyst Ray Neidl says a number of factors may have contributed to the turnaround. "Planes are packed, there are very few empty seats, and if that is the case, that's calling for a price increase. The demand is greater than supply."
Fewer planes are flying to fewer destinations this year. But industry analysts say more people are flying and they are paying more to travel. Ticket prices are about nine percent higher than they were last year. And Neidl says that's another sign the airline industry is finally emerging from the prolonged slump that started after September 11, 2001. "Airlines have done a very good job, in my opinion, since 9/11 of streamlining their operations."
But the airline's gains come at a high price. U.A.L. had to slash its operating costs by $7 billion. The airline also cut 43,000 jobs and reduced wages, pensions and benefits for its remaining employees. Labor leaders say a similar move by Northwest Airlines could lead to a strike. The airline has imposed a contract rejected by its flight attendants that includes a 40 percent wage and benefits cut.
Despite ongoing labor issues and the increasing cost of fuel, the five largest U.S. airline companies reported a collective profit of more than $1.2 billion for the second quarter of 2006. Analysts say that's a strong showing for an industry that's still trying to reinvent itself after six years of declining profits.