Europe’s Big Airlines Are Nowhere Near as Profitable as Their U.S. Rivals

On the surface, the European airline industry doesn’t look much changed from 20 years ago: National flag carriers such as Air France, British Airways, Iberia, KLM, and Lufthansa dominate a handful of giant hub airports. Dig a bit deeper, and you’ll see that the market has shifted in a big way. Over the past decade or so, 10 legacy airlines across the region have combined into three huge groups, a consolidation that makes the market look a lot like the U.S.

But while restructuring at American Airlines, Delta Air Lines, and United Continental Holdings has led to record earnings in recent years, the Europeans remain far less profitable. Their workforces remain restive and strike-prone, they face a web of restrictions from regulators in multiple countries, and for reasons of national pride, the airlines in the big groups continue to operate as separate brands—with many of the associated costs.