eli5: How are airline companies profit margins so thin?

Question

Theres like 5 companies in the US that handle ALL the flights. How do they still have thin profit margins despite being the only options?

Edit: spelling

In: 72

Answer 1

Debt. US airlines raked obscene amounts of debt to finance buying up competition (if I remember correctly, AA was in Chapter 11 when they bough US airways ), and for stock buybacks to enrich their shareholders, and then Covid didn’t help. So while the operations are reasonably profitable (AA operating margin was 9.29% last quarter) the net margin is a disaster because of interest payments.