Yahoo Finance

Key Takeaways

• The four biggest U.S. airlines—Delta, United, American and Southwest—together generated more than $200 billion in revenue last year, but they all lost money actually transporting passengers.
  

• All four carriers registered higher cost per available seat mile than passenger revenue per available seat mile in 2024.

• Still, the airlines all turned in net profits last year. Credit cards are the main reason that's the case.

The four biggest U.S. airlines generated $200 billion in revenue last year. All of them lost money transporting 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 were they profitable? The carriers, whose 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 higher 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, American and Southwest. However, they see United producing a higher PRASM than CASM this year and through 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 advantageous terms, with the card issuers then offering the miles as rewards to cardholders.