You Don’t Want to Run an Airline
Feb 20, 2025 · 9:50
Airlines including American, Delta, United, Southwest and Spirit have been terrible investments for five decades because investors have put tens of billions more into them than the industry has earned in profit, argues Maxinomics. The episode explains that airlines all compete on price with nearly identical planes from just Boeing and Airbus, whose combined order backlog of 15,000 planes means buyers wait at least 8 years for delivery. Idle planes lose $400–$800 per hour, and catastrophes like 9/11 and COVID grounded fleets while fixed costs like pensions and terminal fees continued. Southwest's one-plane Boeing 737 strategy and 10-minute turnarounds explain its outperformance. United's stock fell below its fleet's value, prompting buybacks and Elliott Management's Southwest campaign, while suppliers TransDime and FTAI profit on Spirit's $1.08 million-per-plane yearly maintenance. The whole industry's profit is just $22 billion—less than Google makes in a quarter.
