The nation's largest airlines last week reported ridiculous – for them – first-quarter profits. And it had far less to do with the price of oil and jet fuel than you've probably read.

Oh, to be sure, a 43 percent drop in the price of a gallon of jet fuel in the first quarter this year vs. the first quarter of 2014 is noteworthy and important. And it had a significant impact on the profits earned by American, United, Delta and Southwest airlines in what historically has been the toughest quarter of the year for airlines – one in which they historically have reported huge losses.

But the pull back in global crude prices that began in the middle of 2014 is not the biggest reason why airlines finally are making what, by their industry’s pitiful standards, are great profits these days. (Last year’s 4.6 percent net operating margin was good enough to produce record profits, but still represents a lackluster, below-average profit margin when compared with all publicly traded U.S. companies.)

Rather, the airlines’ new-found profitability stems from other significant changes that are less-well-reported and recognized: the elimination of about 150,000 jobs across the industry since 2001, and the financial restructuring of the industry, largely through the Chapter 11 bankruptcy and merger processes.

Between airline deregulation in late 1978 and the year 2001 U.S. airlines struggled under enormous pressures from the deadly combination of economic instability, uncontrollable labor cost growth, new competition in both the international and domestic discount markets, fleet over-expansion, hyper price competition, rising taxes, the global spread of disease, rising geo-political instability and war, consumer demand for access to expensive new technologies, and lots of plain ol’ dumb management decisions. There were a couple of short periods of what, by broader market measurements, amounted to very modest profitability. But when totaled up, the losses over that 22-year period swamped the few years of profitability.

Then a run-of-the-mill economic downturn that began in early 2001 turned into a full-scale financial crisis after the 9-11 terrorist attacks all-but killed demand for air travel for more than a year. Shaken to their core, U.S. airlines have spent the ensuing 14 years – reluctantly, and with plenty of missteps along the way - getting their own financial houses, and that of their industry, in order. It was an ugly time marked by constant financial turmoil, huge job losses, significant degradation of personal service elements, and the introduction of a long menu of new fees and charges for services that used to come with the price of a ticket.

But today any clear-eyed examination of industry and individual carrier data over those 14 years will reveal that true, pervasive structural change has taken place. And that, not the recent fall of jet fuel prices from their historic highs, is the primary reason for U.S. airlines’ current level of unprecedented profitability.

In the year 2000 U.S. operators of conventionally-sized mainline commercial jets spent a combined total of $33.3 billion on their workforce’s wages and benefits, according to the MIT Airline Data Project. In 2013 they spent only $1.1 billion more than that - $34.42 billion on labor. That means U.S. airlines’ labor expenses in 2013 actually were $11 billion less in 2013 when measured in constant 2000 dollars.

Just how important has that clamping down on labor costs been to the U.S. airline industry? Had their labor costs simply grown at the same rate as inflation over those 13 years, U.S. carriers would have reported a loss of more than $1 billion on operations in 2013 (assuming all other inputs remained as actually reported). Instead, they earned a combined $9.7 billion operating profit. Certainly rising revenues – from relatively modest but noticeable fare increases over the last decade and the imposition of all those additional fees and charges - helped. But effectively lowering their labor costs relative to the rate of inflation has been the single biggest factor in airlines’ new-found profitability.

The second biggest factor has been the industry’s financial restructuring. In 2000 the conventional large jet-flying U.S. airlines carried $28.4 billion in combined long term debt and capital lease obligations, according to MIT's numbers. That debt figure reached a peak of $55 billion in 2008. But by 2013 it was back down to $33.4 billion. Again, in constant 2000 dollars U.S. airlines actually lowered their long term debt and capital lease obligations, which would have been $38.4 billion in 2013 had that figure merely grown in step with inflation.

They’ve done that, in part, by reducing their fleet sizes. In 2000 the big U.S. carriers flew 3,732 planes (not including regional jets and turboprop planes flown by regional carriers, often in partnership with the big airlines). In 2013 the U.S. fleet totaled just 3,434 such planes, a 9 percent decline. Not only did that lower both financial and operating costs, it also helped to reduce the supply of seats and flights. Thanks to the law of supply-and-demand, that reduction in supply allowed airlines to inch up the average fare price paid through a combination of modest fare hikes and reducing the number of seats sold at lower fare price levels.

Taken together, that explains why airlines are making big profits at a time when they’re still paying some of the highest prices ever for jet fuel. In 2000 they paid, on average, 80 cents a gallon, and managed to earn a $6 billion combined operating profit. In 2013 they paid an average of $3.03 a gallon – the second highest average price per gallon in industry history – yet earned $9.7 billion in combined operating profits.

In 2014, even after the more than 50 percent drop in crude oil prices that began last summer, U.S. carriers saw their average price paid per gallon fall to only $2.85. That’s a lot better than the peak price of $3.16 in 2012. But it still was the fifth-highest average price ever paid by U.S. airlines. Yet they saw their combined net profits reach $12 billion.

And in the first quarter of this year, American, United, Delta and Southwest by themselves reported combined quarterly operating profits of $3.9 billion. Certainly the big drop in fuel prices played a substantial role in that remarkable performance in a quarter when airlines typically report huge losses. But, again, the fuel price drop does not, by itself, fully explain the industry’s new profitability.

American, which does not hedge its fuel costs and therefore serves as a good proxy for what airlines actually paid at the pump, said it paid an average of just $1.83 a gallon in the first quarter. That’s a 35 percent drop in the jet fuel price from last year’s $2.85 average. Still, $1.83 a gallon represents a 231 percent increase over the 80 cents per gallon average price that U.S. airlines paid for jet fuel in 2000. Had the price of jet fuel merely kept pace with inflation from 2000 to the firt quarter of this year, airlines would be paying just $1.09 a gallon.

So the recent drop in in fuel prices, while significant, simply isn't sufficient to explain why the reason U.S. airlines finally are making decent profits - no matter what you've been reading lately from Wall Street analysts and business journalists who've been too busy, too lazy, or too inexperienced to look beyond the surface explanations.

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