US airlines finally find business stability, but government intervention threatens to thwart profits

US airlines appear closer than ever to be taken seriously by an increasing number of investors as discourse over how to reward patient shareholders becomes commonplace. Years of capacity discipline, de-leveraging and prudent investment in product have garnered the attention of would-be investors that have historically been dismissive of an industry that seemed unable to manage the peaks and troughs well enough to create a business model that weathered inevitable economic downturns.

But since oil prices reached historical highs in 2008 and have remained near those levels during the last five years, US airlines have managed to turn profits during the last three years even despite this.

Against that backdrop executive teams at the country's largest carriers have continually beaten the drum on capacity discipline and the paring down of debt, which allowed them to give serious consideration to shareholder returns. But investors remain understandably skittish about the longevity of the new-found discipline - and whether long-term lessons have really been learned from past mistakes. And significant challenges remain in achieving the sustainability investors seek. Prominent among these is the heavy hand of government in taxing and regulating the aviation industry. So says US trade group Airlines For America (A4A).