U.S. airline trade group Airlines for America (A4A) reported on Thursday that the country’s nine largest carriers turned a net profit of $6.8 billion during the first three quarters of the year, for an increase of $2.3 billion over the same period a year earlier. Operating revenues rose 5.5 percent, which helped offset the 3.1-percent increase in operating expenses driven by rising airport rents and landing fees, labor and aircraft ownership. The resulting profit margin of 5.7 percent means airlines appear headed to their most lucrative year since 1999, according to A4A vice president and chief economist John Heimlich.

“I don’t remember if we reached 6 percent that year, but I can say fairly confidently...that ’99 was the last time we had these kinds of margins, and you can be quite sure in hindsight that it was useful in ’99 to shore up for the next downturn as we all know from history,” he said.  

Although declines in the price of fuel undoubtedly contributed to the improved results, Heimlich noted that they remain “significantly” higher than the levels seen four or five years ago, and that the airlines used the newfound cash flow during the first three quarters of this year to pay down debt. In the first nine months of the year, U.S. airlines managed to reduce their net debt by $2.4 billion, to $69.5 billion at the end of the third quarter.

“Airlines are still working fast and furious to pay that down to free up more cash to invest in the customer experience and reward investors and employees,” said Heimlich.

Capital expenditures for the first nine months of this year exceeded $10 billion, or more than $1 billion per month, according to A4A statistics. The figure represents the highest rate of reinvestment in 13 years, it added.

Meanwhile, published schedules suggest year-over-year increases in seat capacity of 2.2 percent this quarter, still well below the pre-recession peak. “We’re really entering a period where we’re moving from capacity discipline to balance sheet discipline,” said Heimlich. “When a product is doing better financially, we’re going to provide more of it.”