Which Airlines Are in the Best Shape?

Well, the frenzy of quarterly results has come and gone, with lots of big numbers thrown around and even a few new fees. Seems like a good time to step back and figure out what all this stuff means. Most importantly, which airlines are best positioned to ride out 2009—or even succeed in the second half of this recession-plagued year—and which are vulnerable?

First, the Good:

AirTran: Not only did AirTran post a profit in the second quarter, but the low-cost carrier, which seems to live in the shadow of JetBlue and Southwest, just finished its best first half since 2001. As our own Christine Sarkis reported, “AirTran credits the good performance with its early reaction to the economic downturn last year, which includes reducing capacity, selling aircraft, and reassessing its fuel hedges.” The airline is also the country’s first to have fleetwide Wi-Fi. AirTran has a lot of momentum behind it, and a lot of reason to be optimistic going forward.

JetBlue: JetBlue had a good second quarter, and expects to continue posting profits for the remainder of the year. The carrier has managed to profit from new fees—notably for extra legroom— while avoiding the fees customers really hate (see: baggage fees) and maintaining its free perks like satellite television. A proposed meal service option, which would be offered in addition to its current array of free snacks, could bring in more revenue.

Southwest: It’s been a tough stretch for one of the most reliably profitable airlines in the business, but Southwest appears to be turning things around. The airline posted a solid profit in the second quarter, and new service from LaGuardia has reportedly been strong. New flights from Boston in August could give the airline a boost as well. But the airline itself admits there are obstacles ahead and offers no guarantee that profitability will continue unabated in the coming months. Still, Southwest should be fine in the long run, even if the second half of 2009 is a challenge.

On the Bubble:

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Delta: The world’s largest carrier lost $257 million last quarter, but according to CEO Richard Anderson, that’s not the number you should be focusing on. The correct number is $191 million, which is how much profit the airline would have made were it not for some annoying fuel hedge losses. It’s a bit much to ask that we ignore all the losses, but the man does have a point. Many project Delta will be profitable within a few quarters. We’ll see.

American and Continental: Why lump these airlines together? Each lost money, each responded to its loss by adding fees (so did Delta), but both have healthy cash balances on hand, meaning they are well-positioned to deal with whatever economic troubles are ahead.

The Not So Good:

United: United is the opposite of Delta—it made $28 million last quarter, but would have lost $323 million if not for fuel hedge gains and some other one-time profits. Still, good news this quarter. And that’s where it ends. There’s no real expectation that United will have the same success in the third quarter, and there are major concerns that it lacks the cash on hand to remain solvent through the year. Massive embarrassment courtesy of YouTube surely isn’t helping either.

US Airways: See above. US Airways has pretty much the same problem as United—little, if any money is coming in, and there isn’t a lot of cash on hand to cover its back.

Of course, this is just one industry blogger’s opinion. What do you think? Which airlines do you see riding out 2009 in relatively healthy fashion? Leave a comment below with your thoughts. Thanks!