Air Arabia Crowned as World’s Most Profitable Airline

Can you hear the alarm bells ringing? Spirit and Frontier, two ultra-low cost carriers, delivered shockingly bad news to investors last week. The third quarter has developed far worse than expected, with fuel costs spiking, operational disruptions still vexing, and demand trends cratering.

Are the woes of Spirit and Frontier representative of broader industry trends? With respect to fuel costs, the answer is yes. Other U.S. airlines have issued similar warnings there. But most have denied any significant deterioration in demand. Southwest says bookings look healthy. Delta and United speak of tremendous international demand. Alaska seems pretty content as well. American is holding to its original revenue forecast for the quarter, while just slightly downgrading its forecast for unit revenue.

JetBlue didn’t provide any new updates last week. But imagine what’s going through its head as it views the carnage unfolding at Spirit. For now anyway, JetBlue appears committed to its takeover plans, hoping to assuage regulator concerns with offers to divest more airport assets to rivals.

Delta, which still expects a 13% operating margin this quarter (it was 11% in the same quarter last year), sparked some debate with changes to its loyalty plan. They’re designed in part to reduce crowding at airport lounges. Separately in the U.S., executives gathered at a Chamber of Commerce summit, where FAA frustrations came to a boil.

Airlines around the world are also boiling about more Pratt & Whitney GTF engine delays. Mexico’s airlines, by contrast, are pleased to finally have clearance to expand their U.S. operations again. Lufthansa is expanding its U.S. footprint. Vietnam is expanding its fleet, adding some new Boeing narrowbodies.

The final quarter of the year is just weeks away, meaning third-quarter earnings season will begin soon. As for second quarter earnings season, read on for highlights, as well as a ranking of the world’s airlines by operating profitability.