Delta profits on cheap fuel, but faces other costs

Andy Uhler Oct 14, 2015
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Delta profits on cheap fuel, but faces other costs

Andy Uhler Oct 14, 2015
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Delta Airlines announced strong earnings Wednesday. Other airlines are expected to report big earnings, too. A lot of that has to do with cheap fuel, but they have other costs.

The airline industry took it on the chin for at least a decade. It wasn’t that long ago that oil was $100 a barrel. Blaine Nickeson, associate editor for airlinereporter.com, said low jet fuel prices have changed the math.

“Fuel has, all of a sudden, become their second-biggest cost of operating,” he said. “The first is their labor staffing and benefits.”

If airlines are reporting good news for shareholders, labor unions take note. Delta announced a base pay increase for many of its employees effective Dec. 1, but it cut profit-sharing. Jeff Johnson, dean of aeronautics at Lynn University, said most employees don’t feel personally engaged in the wage negotiation process.

“Most people that work in the industry just kind of, I hate to say this, they get used to it,” he said. “Everybody looks forward to bonuses than actual pay raises.”

Blaine Nickeson said the price of flights is probably not going down anytime soon, but passengers probably shouldn’t complain.

“When you look at what an airline ticket cost in 1995 versus what an airline ticket costs today,” he said, “I mean, airfare is incredibly affordable.”

After mergers, travelers have fewer choices for booking flights, with only three major airlines operating in the U.S. 

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