American Airlines had the exceptionally rare privilege of announcing a $220 million net profit for the 2nd quarter (American is calling it a $357 million profit excluding bankrtupcy costs.)

This is exceptional and it reflects all of the cost savings achieved through bankruptcy to date.  This number should even improve incrementally from a cost perspective for several years to come as the airline’s fleet is renewed more and capacity is grown with additional seats.

Is there  a “but”?  Yes, there is.

This is all due to cost savings, not revenue growth.  In fact, year over year, revenues for Q2 dropped ever so slightly.  While costs can drive this airline to profit, it will be revenue growth that drives this airline to real success.

Revenue growth will take from 1 to 4 years to really be perceived and I don’t expect this focus to take place until Parker & Company are officially in charge.

Filed under: Airline News by ajax