US low-cost carriers offer little insight beyond 3Q as they attempt to contain cost creep

Low-cost and niche carriers in the US enjoyed robust 2Q2012 earnings growth fuelled by solid demand that is carrying over into 3Q2012. But at the same time the country's top LCCs are facing challenges in their core strength as nearly every airline in that category recorded rising unit costs during 2Q stemming mainly from a spike in maintenance spend. As is the case with demand projections, most of the low fare carriers are not offering insight of when the cost creep might abate.

US leading low-cost carriers JetBlue, Alaska Air Group and Spirit Airlines grew their 2Q2012 profits by 108%, 24% and 35% (Alaska and Spirit's rise exclude special items), respectively, joining 42% profit growth at Southwest Airlines. The strong year-over-year profit growth was driven by what the carriers deemed a solid demand environment, which helped to drive solid unit revenue growth at all four of the airlines.