Record Profits At American Airlines As They Seek NC Tax Cap Extension

Apr 24, 2015

Credit American Airlines Group

American Airlines announced their first quarter profits Friday. And they were a record $932 million. It’s great news for the airline and their stockholders and certainly noted by North Carolina lawmakers. 

American didn’t just break their earnings record; they shattered it. Doug Parker, American’s chairman and CEO told investors Friday’s results were nearly double the prior record set just last year. "The results today give us confidence that we’re on the right track," he told investors, "and we’re looking forward to the remainder of 2015 and beyond."

A big reason for that optimism is the price at the pump. Just like gasoline, the cost of jet fuel has gone down significantly over the past year. And American Airlines expects that cost to remain low, meaning profits will stay up. Good for them says Senator Bob Rucho, a Republican from Mecklenburg County, "I’m very happy combined US Airways and American Airlines is profitable." But, he adds, "Does that mean the state of North Carolina continues to subsidize a profitable corporation?"

Jet fuel, again like gasoline, is subject to a state tax. The subsidy is a cap on how much of that tax any airline pays the state. It currently stands at $2.5 million per year. Ever since American Airlines merged with US Airways, they’ve become by far the largest recipient of that tax break.

And with that merger, American may look to scale back its operations in the state. That’s something lawmakers are watching says Rucho. "Is American Airlines reducing either flights or seats? Are they moving out of North Carolina training facilities? You know these were all part of North Carolina under US Air."

The jet fuel tax cap is set to expire at the end of this year. American and other airlines are lobbying lawmakers to extend it.