Even though the majority of airlines were able to stay afloat, it took a longer period of time to return profits to a satisfactory level. Although demand surged all at once when pandemic restrictions eased in the US, many carriers could not accommodate it due to poor staffing levels. In the last two years, airlines have boosted their workforce numbers and have gradually reinstated their operations to what was seen pre-pandemic. With that, profits began to improve as well.
As the aviation industry is a never-ending market of fluidity, it is common for carriers to experience financial successes and challenges. As profits ebb and flow, airlines may be persuaded to either launch new routes or cut service. Ultra-low-cost carrier Spirit Airlines has made drastic changes to its route network due to alleged financial trouble. Following the carrier’s failed merger attempt with JetBlue Airways, the spotlight has been on its poorly generated profits over the past couple of years, and it is rumored that the airline is on the brink of filing for bankruptcy if it does not find a lifeline soon.
Unsatisfactory profitability has also been the result of airline acquisitions. Over the past several years, many US carriers have agreed to join forces in the attempt of saving or improving their finances. The most recent merger between Alaska Airlines and Hawaiian Airlines involved the former purchasing the latter for nearly $2 billion. As rumors swirled around that the two carriers were mulling a merger, reports surfaced that Hawaiian was several million dollars in debt.
The same move happened with the US Airways and American Airlines merger in 2013. American was on the brink of filing for bankruptcy when US Airways management came in to save the day. The acquisition was known as a reverse merger, in which the more profitable airline essentially took over but succumbed to the name and branding of the financially dependent carrier as it was much more recognized on a global scale.
Despite being saved, American has still faced financial struggles since as it has directly competed with the other two US legacy carriers – Delta Air Lines and United Air Lines. The airline has also specifically gone up against one of the largest low-cost carriers in the world: Southwest Airlines. With the so-called “Big Four” airlines being responsible for the majority of the market share in the US, which is the most profitable?
With its premium features and consistent service, it may not be a surprise that Delta is at the top of the list. According to Statista, the Atlanta-based airline was the most profitable passenger carrier in North America last year, recording an operating revenue of approximately $58.2 billion. The performance also placed itself among the top most profitable airlines in the world. According to Insider Monkey, Delta came in fourth worldwide – finishing before Singapore Airlines.
The top three most profitable carriers in the world in 2023 were:
- The International Airlines Group, which owns several carriers, including Aer Lingus, British Airways, and Iberia
- Low-cost giant Ryanair
- Qatar Airways crowned as number one
Back in the US, Delta saw its profits steadily improve and officially regain profitability last year after being sidelined by the pandemic. Insider Monkey reported that Seeking Alpha believes the airline is likely to see its share price improve based on the current low valuation and strong growth that has been displayed. Delta was followed up by Chicago-based United, which generated a revenue of nearly $53.7 billion last year, according to Statista.
While it is common to assume that a legacy airline will almost always be among the most profitable airlines in the US every year, other carriers have caught the attention of analysts. In August, Skift reported that low-cost airlines such as Frontier Airlines and Sun Country Airlines have “been able to routinely stand out as one of the most profitable airlines in the US.” Minneapolis–St. Paul-based Sun Country had an operating margin of 13% throughout the course of last year, which was the highest for any US carrier. Delta reportedly had the second-highest operating margin at 11.6%.
Sun Country did see its revenues decrease with overcapacity in some domestic markets, but most airlines dealt with the same setbacks. Despite the slight dip, the carrier was still able to achieve being the most profitable airline in the low-cost and ultra-low-cost market. It is particularly important because Sun Country can be regarded as one of the least well-known airlines in the country. However, it proves itself to be a major contender in the Midwest, thanks to its robust presence in the Twin Cities – which offers up a notable challenge for Delta, who also operates a hub near the Minnesota capital.
According to Skift, Jay Shabat, an analyst at Airline Weekly, believes Minneapolis is a solid market for Sun Country thanks to the presence of United Healthcare and Target – two large corporations in the US. Other healthcare companies and food processing industries also reportedly have a particularly large presence in Minneapolis.
Sun Country is showing no signs of slowing down, as the carrier has invested in its cargo operations and will be receiving more passenger aircraft in the coming years. The airline had already continued the momentum from 2023 into this year, recording a profit of more than $30 million in the first quarter.
