Despite record summer air travel demand, U.S. airlines are not seeing record profits. Higher labor and other costs are impacting bottom lines, with delays in new aircraft deliveries and a recent engine recall adding to the challenges. While airlines have increased capacity, stocks in the sector have fallen behind the broader market. Analysts are uncertain about what the third quarter will bring, citing potential headwinds such as changing travel demand patterns and external events like the Paris Olympics. Some carriers have already lowered revenue forecasts due to competitive pricing and shifting demand dynamics. Delta Air Lines, often viewed as the most profitable airline, is expected to weather the storm better than its competitors. Other airlines, like United and Alaska, are also seen as more resilient due to their earnings stability and cash flow. With cheaper fares and increased passenger numbers, airlines are adjusting their strategies to adapt to the evolving travel landscape. Some are cutting unprofitable routes, introducing new revenue initiatives, and exploring changes to their business models to stay competitive. Investors and industry analysts will be closely monitoring quarterly results to gauge the sector's performance in the coming months.