Midst the weeping and wailing about high jet fuel prices and the litany of excuses from airline executives like, “Airlines can’t make money with $120 a barrel oil,” some airlines are making money. The airlines that focus on their strengths and put customers first are raking in millions.
After the most recent earnings season for the airlines it struck me that airlines that pay attention to excellence in terms of customer service, even at high prices, and those that pay attention to giving passengers great value in transportation are still making money. Even making millions of dollars or euros with record oil prices.
Here is my, off the top of my head, current honor roll of profitable airlines that make my point. Emirates Airlines and Virgin Atlantic Airlines both focus on giving the high-end and business passenger what they want. They both are flying high.
Net income in the six months to March 31 rose to 1.9 billion dirhams ($517.4 million) from 1.58 billion dirhams in the year-earlier period, Reuters calculated based on full-year data the company released in Dubai on Thursday.
The Group’s latest record performance reflects its success in growing customer demand through the strategic expansion of its business operations across six continents, supported by ongoing investments in the latest technology, products and customer service while keeping a tight rein on costs. This is illustrated by the 21.2 million passengers who flew with Emirates in the latest financial year, 3.7 million more than in the previous year.
The carrier shared that a rise in business class travel helped more than double its pretax, pre-exceptional performance, which stood at 20.1 million pounds for the year ago period. Sales were up 17 percent for its financial year, which ended on February 28.
Carrying a record 4.9 million passengers, Virgin had a 2005-06 pre-tax, pre-exceptional items profit of £41.6m – more than double the figure for 2004-05.
The world’s low cost carriers are also making gobs of money. Southwest Airlines here in the USA is at the top of the heap and the three biggest low-cost carriers in Europe all made money this year. They are providing passengers real value. Value that travelers return time and time again to enjoy.
Southwest said today it earned $321 million, or 44 cents per share, up 15 percent from a year ago, when the airline earned $278 million, or 36 cents per share. Excluding special items, Southwest said it would have earned $121 million, or 16 cents per share. That beat analysts’ forecast of 12 cents per share, according to a survey by Thomson Financial.
The Irish firm made 43.8m euros (£31m) during April, May and June, in line with expectations. “During what BA last week described as the most testing period in aviation history, we continue to …deliver increased profits,” said chief executive Michael O’Leary.
The low-cost airline has managed to offset over 50 per cent of the expected increase in its fuel bill, but says pre-tax profits are set to fall to between £110 million and £120 million for the year to the end of September, compared with £191 million last year.
The Berlin-based company, whose airlines include LTU, Niki, Belair and LGW, earned €8.3 million (US$12.26 million) in the second quarter, compared with a loss of €59 million a year earlier, when it booked charges related to the acquisitions of LTU and Belair.
That helped push Air Berlin shares up more than 2.5 percent to €3.99 (US$5.89) in Frankfurt trading.
Sales rose 6.7 percent to €869.5 million (US$1.3 billion) in the quarter, compared with €654.5 million last year. Its pretax profit fell to €13.8 million (US$20.4 million) from €18.7 million, a decline the airline blamed on high costs in starting new routes to China as well as fees paid to consultants in its aborted attempt to acquire Condor.
There are other airlines that are making money, even in difficult financial times. The common denominator for these airlines is that they are giving their passengers what they want. Airlines known for the best frills are delivering more than ever before with showers on Emirates and better beds on Virgin Atlantic. Airlines known for low prices are growing both their passenger base and their profits by focusing on providing the best value on their respective routes.
Give customers what they want and most businesses will make money.
