If you've taken a commercial airline flight recently, you could be forgiven for assuming that airlines are broke as hell, forced to penny-pinch and slash service to the bone. Not so! Several airlines reported record profits this week. But how?
American, United, Delta, Southwest, and Alaska Airlines all have so much cash on hand and confidence in their own futures that they've announced share buybacks. Airline stocks are booming. The companies have billions of dollars in cash on hand. It's weird, because, have you ridden an airline lately? They seem all janky as hell? As if they need to squeeze every last cent out of everything just to survive for one more day? And the flights are crowded and they charge extra for everything and they're expensive as hell even though they're an objectively miserable experience? How does that work? From the WSJ:
The move, part of a broader effort by United to lift its flagging fortunes through cost-cutting, reflects how big U.S. airlines are using vendors to handle key jobs at most domestic airports, a trend that can reduce expenses but also risks hurting customer service.
Airlines are squeezing their passengers – literally – into planes that are more and more full, helping boost profits at the expense of empty middle seats.
Airlines are not making money in spite of the fact that flying sucks. Airlines are making money because of the fact that flying sucks.
I guess that makes sense now that I think about it. Damn.