The four biggest U.S. airlines generated $200 billion in re🍌venue last year. All of them lost money transp🌼orting passengers.

All four carriers—Delta Air Lines (DAL), United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV)—were profitable in 2024, posting a combined net income near $8 billion and operating income of $14 billion. But all four registered higher cost per available seat mile (CASM) than passenger revenue per available seat mile (PRASM). In other words, the airlines🦄 lost money doing the very thing they're ostensibly in 💝business to do.

So how weܫre they profitable? The carriers, whos🐼e expenses are led by salaries and aircraft fuel, are largely profitable because of lucrative co-branded credit cards.

Delta, which produced the most operating profit ($6.0 billion) and operating revenue ($61.64 billion) of any U.S. airline last year, reported PRASM of 17.65 cents but CASM of 19.30 cents. United came the closest of the four to making money by this measure, which is closely watched by industry experts, but its PRASM of 16.66 cents was just short of its CASM of 16.70 cents.

The Pandemic Reversed the Airlines' Fortunes in 2020

All four airlines had higher PRASM than CASM in 2019 but experienced much high🔥er costs than revenue per available seat mile in 2020 because of the pandemic. None has been to the good since.

Analysts tracked by Visible Alpha see this pattern continuing for at least the next few years for Delta, Americ🦋an and Southwest. However, they see United producing a higher PRASM than CASM this year and thro🥀ugh 2028.

United Chief Commercial Officer Andrew Nocella explained on the carrier's fourth-quarter earnings call that it plans to keep capacity growth in check. Increasing capacity—the total number of seats available per flight on a given route—can put downward pressure on PRASM due to potential oversupply.

"In 2025, we plan to have low to minimal capacity growth in Q1 to support continued PRASM strength," Nocella said, according to a transcript provided by AlphaSense.

Here's Where Airlines Actually Make Money

The big reason airlines can turn a profit boils down to something in your pocket, not your luggage: credit cards. Broadly speaking, airlines sell frequent-flyer miles to credit-card companies at advant꧑ageous terms, with the car🔯d issuers then offering the miles as rewards to cardholders.

Delta made about $7.4 billion from American Express (AXP) last year, "driven by high single-digit growth in co-brand spend and over 1 million new card acquisitions," President Glen Hauenstein said on the company♌'s fourth-quarter earnings call.

American 澳洲幸运5官方开奖结果体彩网:signed an exclusive deal with Citi (C) on co-branded credit cards in early December, sending its 🍌shares up 17% that day.

The carrier, which said it received $5.6 billion from its co-branded credit card and other parters in the 12 months ended Sept. 30, expects that number to keep growing, eventually approaching $10 billion.