Well....the Q2 results of almost all the major US airlines are out, and boy, are they posting some massive profits!!....

So what I am wondering is how are they doing this?....with record fuel prices, did they drastically reduce their cost structure??

Yes. United used its bankrupcy protection to have court ordered wage reductions in all unions as well as to cancel aircraft leases without paying a penalty. US Airways did the same. American, Continental and Delta have negotiated similar agreements with unions and leasors. Southwest always turns a profit. Ticket prices are up due to fewer available seats (all those cancelled leases+ retirement of older airframes) and most airlines have their fuel locked in at $40-50 a barrell until 2009, using a sytem called hedging. They pay now for fuel that won't be used until day X in the future.