Which Airlines are Winning So Far in 2016?

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For major U.S, airlines, 2015 was one of the best years on record. After years of modest gains or major loses, profits were healthy for most carriers last year (and record-breaking for a few).

Has this success carried over into 2016?

Despite last year's impressive performances, the first quarter of 2016 has shown us that success is not guaranteed going forward. Fuel prices, fare wars, stock performance and a number of other variables have affected some airlines more than others so far this year.

Here is how the major carriers have performed during the early months of 2016.

United

Excluding special items, United Airlines earned $435 million in net profits during the first quarter of 2016. However, a couple of key figures were down. Total revenue was $8.2 billion, which was actually 4.8 percent less than last year's first quarter. Another important number, Passenger Revenue per Available Seat Mile (PRASM) decreased 7.4 percent compared to the previous year. This means that the carrier was making less money per seat. This negative stats offset the fact that United was successful in decreasing its overall operating expenses by 5.7 percent.

Investors have noticed these hiccups. United's stock peaked in March at just over $61. The poor numbers and uncertainty about the ability of new CEO Oscar Munoz to right the ship have caused the airline's shares to drop below $50 for the first time since October of 2014. United is certainly not one of the winners so far in 2016, but it is working to appease employees and also expand its international presence. The airline's long term outlook seems positive, but, for now, United is certainly struggling.

Delta

Delta's revenue topped $9 billion during Q1. Overall, the Atlanta-based carrier beat analysts' expectations with a pre-tax income of $1.56 billion. Like United, however, Delta's unit revenue figures fell during the quarter (by 4.6 percent). In short, Delta's capacity grew faster than demand. Because of its large network of international routes, Delta also suffered from poor foreign exchange rates caused by the strong U.S. dollar.

Delta's stock has followed a similar peak-and-fall pattern to United. However, Delta has a very different image at this point. It is not suffering from the same boardroom uncertainty and labor issues that are plaguing United and American, and it seems to be intent on leading the way when it comes to changes that will allow legacy carriers to compete with ultra-budget airlines without losing too much revenue. If Delta's experiments with premium economy class and basic economy fares (which will compete directly with the likes of Spirit and Frontier) work, it could put the airline well ahead of its competition by the end of the year.

American

AA had a better than expected first quarter. Though it beat analysts' expectations, it suffered from a drop in PRASM, which was down by 7.5 percent during the first quarter. That number aside, the airline, which has recently gone through a bankruptcy, a merger, and ongoing labor disputes, performed well during Q1. During April, however, the poor unit revenue numbers and rumblings from unhappy employees caused AA's share price to drop by more than 15 percent.

Like United, American appears to be a the beginning of an effort to re-brand itself and put past issues behind it. CEO Doug Parker has made more than a few gestures to his employees (including tearing up his own contract so that his deal matches that of his workers). It appears that American and United are on the same track. In the long term things look promising, but unit revenue failures and labor problems will continue to make for short term uncertainty.

Southwest

Southwest Airlines had an impressive first quarter compared to the competition. The Dallas-based carrier reported $4.8 billion in revenue and $540 million in net earnings. These represent increases of 8.9 percent and 19.9 percent, respectively, compared to last year. Southwest's overall unit revenue figures were not as bad as its legacy carrier competitors. This difference was reflected in its stock performance. LUV's share price did not fall as much as Delta, United and American's.

Southwest has always been a profit maker. One of the original low cost carriers, its low operating costs and efficient business model have seen it thrive even while other airlines were struggling. 2016 will probably be a more modest year for Southwest compared to 2015, but it looks like the airline will do better than the legacy carriers when the year's final balance sheet is published.

Alaska

Alaska Airlines beat expectations as well. The airline earned $1.35 billion in total revenue for the quarter. Unit revenue figures were unimpressive, with PRASM down by more than seven percent compared to 2015. The Seattle airline's share price actually peaked last December at more than $86. It has since fallen below $70. This is partly due to the poor unit revenue figures and part due to the uncertainty after Alaska purchased Virgin America last month.

Alaska is making moves to increase its overseas reach via codeshare deals. However, investors are waiting to see how Alaska handles Virgin's debts, which have caused concern for some analysts.

JetBlue

Long Island-based JetBlue has been successful in recent years, at least according to its shareholders. A few years ago, shares were in "penny stock" range (under $5 per share). Shares rose to more than $27 for a brief time last year before falling again. The reason for the fall is not a surprise: poor unit revenue figures. JetBlue's PRASM fell by eight percent during the first quarter. Income, however, jumped to $199 million, an impressive 45 percent increase compared to Q1 of last year.

Like Southwest, JetBlue does a good job when it comes to controlling expenses. The poor PRASM number came because the airline increased capacity by more than 14 percent during the quarter. This expansion, coupled with upgraded IFE systems, an increasing number of international flights and more premium class options (MINT) should make JetBlue more competitive with both legacy carriers and LCCs going forward.

The first quarter of 2016 showed that competition and struggles with unit revenue will make it difficult to repeat 2015's overwhelming successes. However, some carriers look poised to have a decent year.

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