Southwest Airlines and Alaska Air Earnings: A Tale of 2 Californias

In the past few years, Southwest Airlines (NYSE: LUV) and Alaska Air (NYSE: ALK) have been arguably the two most successful U.S. airlines. Southwest and Alaska have achieved enviable margins through a combination of low fares and an unrelenting focus on efficiency.

However, the two carriers' fates diverged in the third quarter. Southwest Airlines posted another strong quarterly profit. Meanwhile, Alaska Air stumbled, reporting a significant year-over-year decline in its profitability. The discrepancy can be traced back largely to how these two airlines performed in California.

Last quarter, Southwest Airlines was hit hard by Hurricane Harvey and Hurricane Irma. In total, the storms reduced the company's revenue by about $100 million. Nevertheless, revenue per available seat mile (RASM) declined just 0.5% year over year.

Source: Fool.com