The Q2 2024 Earnings Scoreboard

In part one of this week’s podcast, Gordon Smith and Jay Shabat reveal which U.S. airlines had the best and worst second quarters of 2024. In part two, we turn our attention to the latest developments at European supergroup IAG, as it withdraws from a planned acquisition of Air Europa. This episode is presented by American Airlines.

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1. Alaska Airlines' Strong Performance: Alaska Airlines emerged as the standout performer in Q2 among U.S. carriers, with a 16% operating margin, which is notable given that many other airlines struggled or saw margins decline.
2. Widespread Margin Decline: U.S. airlines collectively reported an 11% operating margin for Q2, down from 15% in the same quarter last year. This decline is largely attributed to rising operational costs across the industry, which many airlines have struggled to offset.
3. Variance in Airline Performance: There is a significant variance in performance among U.S. carriers. While some like Alaska, Delta, and United have managed to maintain relatively strong margins, others, like Spirit and Hawaiian Airlines, reported negative margins, highlighting the differing impacts of cost pressures and market conditions.
4. Challenges for Low-Cost Carriers: Airlines like Sun Country and Spirit faced increased competition and capacity in their markets, leading to pressure on fares and operating margins. Sun Country’s margin dropped to 5% from 14% the previous year, and Spirit posted a negative 13% margin.
5. IAG's Consistent Success in Europe: IAG, the parent company of British Airways, Iberia, and others, reported a robust 15% operating margin in Q2, consistently outperforming its European rivals. The company also decided to walk away from its planned acquisition of Air Europa due to regulatory challenges, although it retains a 20% stake in the airline.