- Southwest, JetBlue, and Alaska Airlines reported billions of dollars in tax savings during the fourth quarter of 2017.
- The airlines attribute these savings to recent tax reform legislation.
- Southwest, JetBlue, and Alaska have all announced it will give its employees a $1,000 bonus as a result.
Tax reform legislation is having a major effect on airline earnings. And thus far, Southwest, JetBlue, and Alaska Airlines seem to have experienced the most immediate benefit from the recent changes in US tax policy.
On Thursday, Southwest Airlines reported a $1.4 billion benefit due to tax reform legislation. JetBlue and Alaska Airlines reported fourth-quarter tax benefits of $502 million and $274 million, respectively. United Airlines also saw its tax expense in the fourth quarter of 2017 fall 95.9% in part because of a $192 million tax benefit.
The end effect of these one-time tax benefits on fourth quarter and 2017 annual earnings are significant.
Southwest’s Q4 net income skyrocketed 261.7% to $1.89 billion while the airline’s annual net income is up 55.4% to $3.49 billion.
JetBlue’s Q4 profits surged 291.2% to $672 million with the New York-based carrier’s annual profits up 51.2% to $1.15 billion.
Concurrently, Alaska Airlines’ Q4 profits jumped 221.9% to $367 million and its annual net income up 26.3% to $1 billion. Alaska’s figures also include Horizon Air and Virgin America, acquired for $2.6 billion in 2016.
The $1.5 trillion Trump tax plan, which passed in early December, has reduced the corporate tax rate from 35% to 21%. In addition, the plan changes the way the US government taxes companies that operate internationally.
These airlines have also passed this tax benefit down to its workforce with Alaska, JetBlue, and Southwest all promising $1,000 bonuses for its employees. American Airlines has also announced a $1,000 bonus.