Looking Ahead, And Back, At U.S. Airline Profits (1959)

The first quarter of 2015 is certainly one the U.S. airline industry will look back on fondly. Thanks to a dramatic drop in jet fuel prices from a year earlier, carriers posted robust profits. United Airlines saw an improvement of nearly $1 billion on its balance sheet, from a loss of $489 million during the first quarter of 2014 to a net profit of $508 million this January-March.

If oil prices remain near current levels, U.S. airlines could be on course for a blockbuster year – at least by historical standards. Data compiled by Airlines for America, the industry’s trade group, shows a pretty dismal profit picture. Looking back to 1948, U.S. carriers collectively posted a net margin in excess of 10% only once, in 2006 – and that followed a -18% margin in 2005 .

The next-best years were way back in 1965 and 1966, which both saw margins of 7.4%. Last year, the industry’s margins reached 4.6%, putting it on par with the relatively robust days of the late 1990s but still well below the Standard & Poor’s index average of 9%.

Predictions of potential record earnings were made by Aviation Week 56 years ago, in our May 4, 1959 edition. “If the general economy holds to its upward trend throughout the balance of the year, as most economists predict it will do, revenues for the year will show one of the sharpest gains in airline history,” wrote  Transport Editor L. L. Doty. He predicted that industry profits “may go as high as $75 million” for the year, though that would be “far short of the earnings deemed necessary by the industry to bring about jet operations successfully and economically.”

Doty was close on one count: the industry would end 1959 with a profit of $73 million, which represented a margin of 2.8%, according to Airlines for America. Then profits went into a three-year slump. The jet age, however, would not be held off.

► Read the article from the May 4, 1959 issue of Aviation Week:

US Airlines May Hit Record Earnings

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