It’s true investing in the airline industry has been a good way to lose money for a long time.
But citing early post pandemic years to make that point feels misleading.
It’s like saying someone drives badly and instead of pointing to their speeding tickets, it’s like pointing out their car is in the shop with body damage… from a falling tree branch.
All travel was shut down for a while and when it opened up business travel was nonexistent. It’s still down and expected to never return to prepandemic. It’s amazing they made any profit in 2023.
Yes, airlines are not highly profitable but pandemic years are a terrible example due to being a weird black swan event.
Discussing nominal profits when comparing various businesses' "profitability" is almost never productive.
Any business needs a certain amount of cushion to counter volatility, and to earn a return for shareholders. If you had a business with $1M of revenue and $20k of profit, surely you would not expect $20k of profit when you hit $2M of revenue (because 2% profit margin is objectively very low. I have yet to see of successful businesses operate year after year on less than that, and at 0% they become a charity).
Hence profit margin is almost always the relevant figure, especially when you get down to the low single digit percentages.
mint2|1 year ago
It’s true investing in the airline industry has been a good way to lose money for a long time.
But citing early post pandemic years to make that point feels misleading.
It’s like saying someone drives badly and instead of pointing to their speeding tickets, it’s like pointing out their car is in the shop with body damage… from a falling tree branch.
All travel was shut down for a while and when it opened up business travel was nonexistent. It’s still down and expected to never return to prepandemic. It’s amazing they made any profit in 2023.
Yes, airlines are not highly profitable but pandemic years are a terrible example due to being a weird black swan event.
lotsofpulp|1 year ago
Which years should they cite to avoid misleading others?
https://www.macrotrends.net/stocks/charts/UAL/united-airline...
https://www.macrotrends.net/stocks/charts/DAL/delta-air-line...
https://www.macrotrends.net/stocks/charts/AAL/american-airli...
https://www.macrotrends.net/stocks/charts/LUV/southwest-airl...
https://www.macrotrends.net/stocks/charts/ALK/alaska-air/pro...
https://www.macrotrends.net/stocks/charts/HA/hawaiian-holdin...
https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa...
https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlin...
selectodude|1 year ago
https://www.iata.org/en/iata-repository/publications/economi...
lotsofpulp|1 year ago
mbesto|1 year ago
This is like saying walmart isn't highly profitable...you make up for it in volume.
lotsofpulp|1 year ago
Any business needs a certain amount of cushion to counter volatility, and to earn a return for shareholders. If you had a business with $1M of revenue and $20k of profit, surely you would not expect $20k of profit when you hit $2M of revenue (because 2% profit margin is objectively very low. I have yet to see of successful businesses operate year after year on less than that, and at 0% they become a charity).
Hence profit margin is almost always the relevant figure, especially when you get down to the low single digit percentages.