Airline profits delayed
TEXT OF STORY
Lisa Napoli: Who’s responsible for airport delays? Senator Charles Schumer blames the head of the Federal Aviation Administration, and he wants the FAA’s administrator to resign. But there are other factors in play, some of which may be reflected in earnings reports to be released today from American, Delta and Southwest. Marketplace’s Jeff Tyler reports.
Jeff Tyler: Airlines have been flying with fewer vacant seats than ever.
That’s partly because carriers have reduced the number of planes in the air. Fewer flights can mean more delays, while fuller flights translate into higher profits.
Ray Neidl: Unfortunately, because of high fuel prices and the inability to get across the board ticket-price increases, the profitability is not where it should be with this level of demand.
That’s Ray Neidl, airline analyst with Calyon Securities. He says competition from low-cost carriers has kept prices from rising. As a result, Neidl expects the industry had a good second quarter, but not great.
Neidl: Profits should actually be up, year over year. However, they’re not at nearly the levels where the airlines need them to be to make up for all the years they lost money.
As far as delays go, Neidl says that if politicians were serious about improving air traffic control, they’d bite the bullet and pay for a multibillion dollar upgrade for outdated technology.
I’m Jeff Tyler for Marketplace.
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