Loss making airlines typically blame industry conditions and cite reasons beyond their control for their losses. None of these airlines ever acknowledge that they might have failed to develop or leverage existing firm level capabilities in order to deal with difficult industry conditions. It is an established view in strategy literature that difficult industry conditions can be overcome by developing appropriate firm level capabilities. Therefore, the role of firm level capabilities in determining profitability cannot be ignored. This paper proposes that very difficult industry conditions in the airline industry can be overcome by leveraging one’s resources and capabilities as is the case with other industries (Peng, 2001; Lahiri et. al., 2012). The performance of Malaysia Airlines and Air Asia is analysed and contrasted in support of this argument.