The current year turned out to be a busy period in terms of the number of events that occurred in the United States aviation sector, but the string of news from the relevant sphere activities was clearly not unambiguously positive and contained a lot of negative information that has sensitive consequences for companies in the practical plane.
Five days after the start of 2024, an incident occurred involving an almost new Boeing 737 Max operated by Alaska Airlines. In Portland, Oregon, this aircraft took off after sunset. At that moment, the door panel of the Boeing 737 Max blew off. This incident became a kind of reference point, after which the aircraft manufacturing company began to move along a trajectory toward a kind of crisis mode of existence. The incident in Portland caused delays in the delivery of new aircraft for several months.
Two weeks after the specified incident, a federal judge blocked the process of implementing the deal, under which JetBlue Airways planned to purchase Spirit Airlines. As a result of this decision, a smaller company, which also faced a kind of collapse of the internal budget, found itself in a territory that, in a symbolic sense, can be described as a zone of realization of the coincidences of fate and life, where the configuration of the future is formed by unforeseen surprises, many of which do not contain positive prospects and are the initial stage of a rapid movement in the abyss. For Spirit Airlines, the failures of 2024 generated, in a sense, a logical outcome. This company filed for Chapter 11 bankruptcy protection in November.
Overall, the current year has been largely dramatic for the US airline sector. The multitude of events that have occurred has not become a set of success stories and examples of success. Airplanes flying in the troposphere and sometimes gaining high altitude, reaching the stratosphere, in a symbolic sense, looking up, feel the breath of icy and indifferent space, which idly looking at the failures of earthly business from the tops of the universe, where, against the background of the invincible might of eternity, the fleeting being loses any force. At the same time, Earth continues to rotate around the inclined axis. The business continues in the space of this process, including in the US air transportation area, which is going through difficult times, but difficulties and problems can be overcome, and the future is not doomed to failure. At the same time, the situation is already improving.
For the US airline industry, 2024 will be remembered, among other things, for the campaign by activists at one of the country’s most cautious carriers, the technical meltdown that stranded hundreds of thousands of travelers during the peak summer travel season, and the first major airline merger since Barack Obama was president of the United States.
Federal Aviation Administration chief Mike Whitaker announced he would step down on January 20, about a year into a five-year term, and on the day of the inauguration of President-elect Donald Trump. Against this background, the critical agency, which, among other things, certifies aircraft and regulates processes carried out in the airspace of the United States, will again remain without a leader. It is worth noting that recently there has been a kind of tendency in the US, in which the chief executive officers of airlines are calling for an increase in the number of air traffic controllers and growth in investments in air traffic technologies.
There is a kind of race going on among carriers in the United States to see which of the companies in the appropriate category will become the most profitable and have the most premium status, strengthening market reputation and having a certain impact on what can be described as consumer perception. There was also an increase in the popularity of cabins closer to the front of the plane among travelers.
The top two contenders Delta Air Lines and United Airlines generated most of the profit US of the airline sector. The value of their shares has been growing to record heights. Smaller airlines leaned into roomier seats and announced higher-end credit cards.
Airlines intensely competed with each other until the number of US flights decreased in the industry. Fares fell against the background of the situation before its transformation. At the same time, the international tourism boom, for which the off-season is not a deterrent, currently shows no signs of slowing down. The difficulties faced by the industry have not canceled out the upward dynamic of the demand for air travel, which has reached record levels. Chief executive officers of airlines evaluate the prospects of their business through the prism of an optimistic perception.
Delta Air Lines, the most profitable of the US carriers, faced the negative and very sensitive impact of the CrowdStrike outage, which occurred in July and caused a huge number of Microsoft Windows machines to be offline. For the company, this incident financially triggered unforeseen expenses of over $500 million. Moreover, thousands of carrier customers are stranded. The number of canceled flights, in this case, exceeded all of 2019. At the same time, Delta Air Lines was able to cope with the difficulties. The company’s problems are a thing of the past, and the present reality is much more favorable than the state of affairs formed under the impact of the consequences of the summer incident. In the current month, the value of Delta Air Lines shares has shown growth, reaching an all-time high.
Chief executive officer of the mentioned company Ed Bastian, during a conversation with media representatives last week, said that next year the demand for air transportation will be on a growth trajectory. This forecast is generally consistent with the current tendencies of the specified indicator. Delta Air Lines is expanding its premium offerings for high-paying customers. The carrier has opened three new Delta One lounges for travelers flying in that eponymous highest-tier cabin, New York, Los Angeles, and Boston opened this year, with more on the way. The corresponding actions are a sign that the company continues to focus on upscale travelers. Delta Air Lines, against the background of its achievements in the premium category, is gradually becoming not just a brand, but in a sense a term for denotation belonging to elitism, a conditional abstract metaphorical space where gold is not a special precious metal, but the base material from which everything that exists is made. The premium status of the company has become so high and has been transformed into something like an integral element of the order of things to such an extent that in the sketches the corresponding theme is already played out in a humorous context. In such humorous miniatures, Delta Air Lines employees do not allow some people to join the club of carrier customers due to what can be called an insufficient level of elitism.
The carrier did not roll out a business-class lite product, which some analysts expected. At the same time, new lounges can relieve popular Sky Clubs.
Another player in the US airline industry, United Airlines, has been making efforts to expand its network this year. It is expected that the concrete practical results of the relevant actions will be visible next year. United Airlines strives to gain customers who are interested in traveling beyond the destinations that are standard for US carriers. According to media reports, the main result of the expansion of the company’s network will be new routes, including to Mongolia, northern Spain, and Greenland. Carrier probably strives to become the main provider of offers for those travelers who want to be away from home, in the space of another civilization, where a fundamentally different ideology of life dominates and being is realized in the territory of exotic climatic circumstances for them. In a certain sense, this case implies the desire to expand the geography of travel on a global level, beyond the traditional tourist routes.
This year, the carrier has demonstrated business results that are definitely good news for investors. The company also has high goals for the next year. The value of shares of United Airlines has more than doubled since the beginning of 2024. The company became the US top-performing carrier.
Moreover, United Airlines is introducing freshly outfitted narrow-body planes with new interiors featuring seat-back screens and Bluetooth connections into its fleet. Carrier also announced a collaboration with Starlink, owned by Elon Musk’s company SpaceX. In this case, the partnership is aimed at launching a Wi-Fi service for United Airlines customers. The carrier will not charge for the mentioned service following Delta Air Lines and JetBlue Airways.
United Airlines chief executive officer Scott Kirby stated at the beginning of the current year that the company does not count on the yet-to-be-certified Boeing 737 Max 10. It was also noted that the carrier will look at more Airbus aircraft as an alternative. At the same time, Scott Kirby supported the new head of Boeing, Kelly Ortberg.
Southwest Airlines shocked its customers this year, both the loyal ones and those for whom receiving the services of this particular carrier is not a matter of principle. In the summer, the company announced that it would start assigning seats and update its uniform cabin to include several rows with extra legroom. The carrier noted that the relevant decision is aimed at increasing revenue. In the nearly half-century history of Southwest Airlines, this change in business concept is actually the largest. It is rather inappropriate to claim that passenger comfort has given way to the desire for earnings in the priority system, but at the same time, movement in the corresponding direction, albeit not large-scale, is observed.
Southwest Airlines said that work on making the mentioned changes to the concept of activity had been underway for several months. At the same time, the carrier announced these changes after activist hedge fund Elliott Investment Management took a roughly $2 billion stake in the airline and insisted on internal transformation, including the resignation of chief executive officer Bob Jordan. Ex-CEO and former Chairman Gary Kelly agreed to retire. Southwest Airlines appointed six new board members in October, including five of the hedge fund’s nominees.
American Airlines ousted its commercial chief, Vasu Raja, in May. This happened after the carrier’s sales strategy, which excluded travel agencies in favor of direct selling to business travelers, demonstrated the opposite result to preliminary expectations. Against the background of the mentioned failure, American Airlines sharply lowered its sales guidance. The carrier’s outlook has improved since then. Currently, executives rate the prospects for 2025 as optimistic. The company has signed a new credit card deal with its partner Citi. The carrier will also end things with its co-brand partner Barclays, a holdover from America’s 2013 merger with US Airways.
For Spirit Airlines, 2024 was not a good year. In January, this budget carrier, which is a kind of object of ridicule among comedians, faced the fact that a federal judge blocked the acquisition of it by JetBlue Airways. After that, the budget carrier was left alone, hampered by problems. In the relevant context, it is understood, among other things, that after the coronavirus pandemic, Spirit Airlines faced a sharp increase in labor and other costs. Another negative aspect of the reality surrounding the budget carrier is the increased competition in domestic markets. Spirit Airlines also found itself sidelined by the growing demand for certain air routes, including flights to Japan and Italy. It is worth noting that the company did not have routes to the mentioned countries. For the mentioned reason, in this case, it is not the lost opportunities that are observed, but the inability to take advantage of a scalable tendency due to the long-standing specifics of the activity. The recall of Pratt & Whitney engines was also a painful circumstance for Spirit Airlines. Dozens of the company’s aircraft were out of the airspace for the mentioned cause.
Last month, the carrier filed for Chapter 11 bankruptcy protection. This is the first such procedure initiated by a major US airline after 2011 when American Airlines did the same thing. Spirit Airlines expects to be able to emerge in the first quarter of next year. It is not yet known whether the company will try to combine with another budget carrier Frontier Airlines again.
Spirit Airlines, having changed its business model envisaged charging a low fare and adding on fees for everything else, began offering more bundled options in the summer.
JetBlue Airways is moving forward. For this carrier, the main goal is to reduce costs and return to profitability. New chief executive officer Joanna Geraghty and former commercial chief Marty St. George, who returned to the airline as president in February, set out on JetForward, a strategy aimed at refocusing the company. After the end of the coronavirus pandemic, the carrier faced a large number of unprofitable routes. At the same time, premium-equipped planes deployed to the wrong places. This month, the carrier announced it would update some of its jets with a domestic business class, to complement its aircraft that feature its top-tier Mint business class. Since the beginning of the current year, the value of JetBlue Airways shares increased by more than 40%.
For Alaska Airlines, 2024 began with an accident. There was a door plug blowout of one of the carrier’s new Boeing planes. This was followed by the temporary grounding of Max 9s. Payouts were received from Boeing. In the summer, Alaska Airlines received approval from antitrust regulators to implement the deal to acquire the struggling carrier Hawaiian Airlines for almost $2 billion. This is the first merger of two major US airlines since 2016. The value of Alaska Airlines shares has increased by more than 70% since the beginning of 2024.
Frontier Airlines is making a profit again and is aiming to go upscale. The carrier plans to outfit its planes with first-class domestic seats. The company also intends to start offering customers more bundles, including seat assignments, luggage, and no change fees. Chief executive officer Barry Biffle said the carrier expects to return to double-digit margins in the middle of next year.
Allegiant Airlines has turned a corner, seeing high demand in peak periods. The carrier updated its guidance for the fourth quarter of the current year, which exceeded analysts’ expectations.
Sun Country has high margins. This indicator is particularly noteworthy in the context of the fact that the mentioned carrier is a low-fare airline. The company has benefited from its cargo-flying contract with Amazon. At the same time, competitors are cutting capacity from its home hub of Minneapolis. The diversity of the carrier’s revenue provides it with the economic moat that has enabled Sun Country to maintain profitability in the most volatile and highly competitive quarters since the coronavirus pandemic. This was stated by Deutsche Bank airline analyst Mike Linenberg.
