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Airlines announce soaring profits for 2014 second quarter

American, United and Southwest reported record-setting, second-quarter results, building on Delta’s solid performance Wednesday.
By The Associated Press Published: July 25, 2014
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Investing in airlines has long been the butt of jokes, especially when many U.S. carriers traipsed through bankruptcy court in the past decade.

Now riding a post-merger tide of higher fares and stable fuel costs, those same airlines are piling up profits — and sharing the newfound riches with investors.

American Airlines announced Thursday that it would pay its first dividend in 34 years, and both American and United Airlines announced big plans to buy back their own stock, a strategy designed to boost the value of remaining shares.

American, United and Southwest reported record-setting second-quarter results, building on Delta’s solid performance a day earlier.

Airlines are prospering as mergers have reduced competition. They used bankruptcy to squeeze costs from employees and suppliers, such as the smaller carriers that operate regional flights, and have benefited from stable fuel prices.

American Airlines Group Inc., the world’s biggest airline company since American’s December merger with US Airways, said it will pay its first dividend since 1980, a cash payout of 10 cents per share, which could cost nearly $300 million a year.

“It is hard to believe that less than eight months ago, American was in bankruptcy, yet today we are reporting record profits, prepaying debt, making additional pension contributions and declaring dividends to shareholders,” CEO Doug Parker said in a letter to employees.

Southwest has been paying a dividend for more than 37 years and boosted it by 50 percent this spring. Delta Air Lines restored its dividend last year.

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By the numbers

Airline stocks have surged in the past two years but have also had down days recently due to concern about growth in capacity on lucrative international routes. In afternoon trading, shares of American Airlines fell $1.03 to $42.30; United lost $1.18 to $44.82; Southwest slipped 36 cents to $28.51; Delta Air Lines Inc. fell $1.09 to $38.06; and JetBlue fell 20 cents to $11.08.

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