U.S. airlines are raking in money thanks to winter weather

Wet weather caused more than a billion dollars worth of damage to U.S. airlines last winter, costing them an estimated $2.1 billion in lost revenue, fines and other costs. So it was no coincidence…

U.S. airlines are raking in money thanks to winter weather

Wet weather caused more than a billion dollars worth of damage to U.S. airlines last winter, costing them an estimated $2.1 billion in lost revenue, fines and other costs. So it was no coincidence that the relatively good weather of this winter — less than a foot of snow at the White House, most of New York City spared, nearly all the east coast spared — meant it was a particularly strong booking season. Nearly 58 million people will travel on U.S. airlines between now and March 25 — a 6.6 percent increase from last year, according to data from Airlines for America, the industry’s trade and lobbying group.

For a brief moment last year, the other side of these trends appeared bleak, when foreign airlines reported some of the highest revenue-per-available-seat-mile — a profitability measure that can include hotel room, meals and even some plane rides — and canceled flights over a major cyberattack on British Airways. But that has subsided as storms and international unrest have faded from the headlines. While some foreign airlines have suggested that the recent strength of the dollar helped boost U.S. business, pricing isn’t strong, and international travelers — who are more likely to see their vacation begin in Europe, where prices tend to be higher — are probably still buying their tickets elsewhere.

U.S. airlines also benefited from a flood of more passengers who were waiting out stricter baggage-screening requirements before flying. Companies were forced to spend money on screening large numbers of bags, which dented airlines’ margins. The restrictions have since been removed, and airlines are finally making money again — on the other hand, the real reason for the “explosion” in bag-screening business was missed business that could have resulted from a single bad weather day.

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Aside from the noise from foreign airlines, it’s worth noting that everything is coming up roses for American carriers. None of the three majors — United, American and Delta — are now losing money. American Airlines, the nation’s biggest carrier, is expected to post a slight profit in the fourth quarter. Its high stock price, at around $48, has been largely credited to performance in its international routes. Delta, which has been seen as a more likely acquisition target for a U.S. airline, is slated to report on Feb. 28, and it too will have impressed investors with earnings gains in January. United, which finally caught up to its rivals on international growth last year, recently raised guidance.

The second half of this year is expected to be similar to the first half, with the worst weather in early winter coming to an end and the warmer months ahead. The combination should be a boon for the airlines.

Read more at The New York Times.

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