Europe’s Airlines Approaching U.S.-Like Levels of Profitability

Most of Europe’s publicly-traded airlines have now reported their second-quarter results. A few like Aegean and SAS will report later this month. Others like Virgin Atlantic, Alitalia, TAP Air Portugal and LOT Polish—as non-public companies—generally keep their financial reports to themselves. Even without total transparency, however, there’s enough new information to delineate the key trends and forces shaping Europe’s airline sector midway through 2018. Here, in no particular order, are the most important:— The sector maintained healthy profit margins in the second quarter: There’s lots of variation by airline, but collectively, the eight carriers featured on our page nine earnings scoreboard—which represent the vast majority of European capacity—managed a 10 percent springtime operating margin, only a point less than the 11 percent they jointly earned last year. Taking the Easter shift into account, it’s fair to say that unlike its U.S. counterpart, Europe’s airline industry showed no meaningful year-over-year profit deterioration.