US airlines make financial progress in 1H2013, but fuel cost pressure remains a constant overhang

US airlines continued to make solid financial gains during 1H2013, growing margins to 2% compared to 1.6% the year prior. While those results would make executives in any other industry squirm, the increase reflects some progress the industry has taken to change business fundamentals to produce consistent profits.

Now the challenge will be to sustain and grow profits through an entire business cycle that does not include the benefits of Chapter 11 reorganisation and the positive effects of industry shrinkage through consolidation. With fuel prices remaining just as volatile as during the last five years and no end in sight for the taxation facing the industry, perhaps a shift in thinking is necessary to make the transition from simply surviving to thriving. History suggests that simply making profits may not be the best environment for sharpening that edge.