2nd Quarter 2007 Unit Costs

[Pacemaker]

Cost per available seat mile in cents, per Bureau of Transportation Statistics

1 US Airways 16.3
2 Delta 14.3
3 Continental 13.5
4 America West 13.1
5 United 13.0
6 Northwest 13.0
7 American 12.8
8 Alaska 11.7
9 Frontier 10.7
10 AirTran 9.4
11 ATA 9.3
12 Southwest 9.0
13 Spirit 8.5
14 JetBlue 8.0

 

[insp89]

Cost per available seat mile in cents, per Bureau of Transportation Statistics

1 US Airways 16.3
2 Delta 14.3
3 Continental 13.5
4 America West 13.1
5 United 13.0
6 Northwest 13.0
7 American 12.8
8 Alaska 11.7
9 Frontier 10.7
10 AirTran 9.4
11 ATA 9.3
12 Southwest 9.0
13 Spirit 8.5
14 JetBlue 8.0

You got any RASM numbers handy ?

Not to make any excuses for this lame management team @ Usairways,
but aren't they the only airline operating 2 seperate airlines under the same umbrella ?

This place is a work in progress, it will continue to be in-efficent until all the Transition agreements
are in place.

 

[BoeingBoy]

You got any RASM numbers handy ?

They're in this BTS press release.

This place is a work in progress, it will continue to be in-efficent until all the Transition agreements
are in place.

Combining all workgroups will yield some slight efficiencies, but both past and current management haven't seemed very interested in running an efficient operation so I wouldn't hold your breath waiting for that to change.

Jim

 

[Non Rev]

Why is USs' unit cost so high even after 2 BK's? I would have thought it would have been lower.........

 

[insp89]

Why is USs' unit cost so high even after 2 BK's? I would have thought it would have been lower.........

The employees are STILL over compensated !!
Thats it, Thats the Ticket !!
Concessions, More Concessions for everyone ! [ Except Management, of Course]

 

[Pacemaker]

Seems to me a certain someone on this board promised us during BK2 if we'd just hand over our wallets again, this would be one lean mean airline with CASM below 10 cents.

 

[sharktooth]

Why is USs' unit cost so high even after 2 BK's? I would have thought it would have been lower.........

Perhaps the things "common wisdom" say contribute to unit cost really don't, verifying the adage that "common wisdom" really isn't so common?

BK 2 was sold as reducing "employee costs", not reducing "unit costs". Don't feel bad about your misinterpretation as many extend that logic without basis, especially the unions. BK 2 had nothing to do with "saving" US. Management simply wanted to make their own jobs easier (perhaps so they could staff it with the no-loads they have today).

 

[PayParity]

US Airways Group Inc. had the highest operating profit margin of the country's airlines in the second quarter, a recent report says.

The Tempe, Ariz.-based carrier's operating profit margin topped nearly 14 percent in the second quarter with $319 million in profit, according to the Bureau of Transportation Statistics, a division of the U.S. Department of Transportation

Of the low-cost carriers, America West Airlines ranked among the lowest in profit margin, with an operating loss margin of 2.6 percent. The airline, which merged with US Airways in September 2005, operates as a separate airline under the Federal Aviation Administration. It lost $25 million in the second quarter. The airlines will report combined data later this year.

At the same time, US Airways also had the highest cost per seat mile, at 16 cents. The network carriers averaged 13.4 cents per seat mile. The airline's cost per seat mile totaled nearly $2 billion, ranking it 6th out of seven network carriers in cost per seat mile

Story

 

[Pacemaker]

PayParity, good point; the airline continues to enjoy a revenue premium.

For now.

But when you really start to dig into the cost numbers you find something doesn't add up. Here is data for 1Q 2005, just prior to the merger announcement.

CASM/Total Operating Costs

US Airways 14.8/1,570,000,000
America West 9.7/678,000,000

and again for 2Q 2007

US Airways 16.3/1,974,000,000
America West 13.1/972,000,000


A 43% rise for AWA, a 25% rise for US. Why the disparity? Did everybody at AWA get a huge raise? Could it be those "administrative costs" we've heard about?

 

[Be Careful What You Wish For.]

OK, great- BK3 coming down the road.

What is the problem-really could someone please give a laymans? explanation accounting why we are always the highest?

 

[sharktooth]

PayParity, good point; the airline continues to enjoy a revenue premium.

For now.

But when you really start to dig into the cost numbers you find something doesn't add up. Here is data for 1Q 2005, just prior to the merger announcement.

CASM/Total Operating Costs

US Airways 14.8/1,570,000,000
America West 9.7/678,000,000

and again for 2Q 2007

US Airways 16.3/1,974,000,000
America West 13.1/972,000,000
A 43% rise for AWA, a 25% rise for US. Why the disparity? Did everybody at AWA get a huge raise? Could it be those "administrative costs" we've heard about?

Well duh!!!!

What about fuel costs? I believe you will find that the "east" contained their costs vs the "west" who spent like a dog facing divorce. Actually, you have barely grazed the face of theft, sanctioned by stupid "merikans.

 

[Be Careful What You Wish For.]

Short of getting a cogent response, do not all airlines suffer under higher fuel cost?(Duhhhhh!).

Well why are the costs so high? Everybody quotes the costs-but what are the costs made up of and more importantly why are ours higher?

 

[BoeingBoy]

Obviously, fuel costs play a part - spot prices were up about 40-45% from 1Q05 to 2Q07. However, Pacemaker also hit on another part:

Could it be those "administrative costs" we've heard about?

If you dig into the numbers that are used to produce the BTS quarterly report on financials, HP reported basically $0 "general & administrative" expenses in 1Q05 (presumably it was included in AW Holdings expenses instead of the airlines) but in 2Q07 reported $13.8 million. Meanwhile, US (the airline, not group) saw "general & administrative" expenses drop by about $45 million over the same period - about 35%.

Jim

 

[Be Careful What You Wish For.]

Obviously, fuel costs play a part - spot prices were up about 40-45% from 1Q05 to 2Q07. However, Pacemaker also hit on another part:
If you dig into the numbers that are used to produce the BTS quarterly report on financials, HP reported basically $0 "general & administrative" expenses in 1Q05 (presumably it was included in AW Holdings expenses instead of the airlines) but in 2Q07 reported $13.8 million. Meanwhile, US (the airline, not group) saw "general & administrative" expenses drop by about $45 million over the same period - about 35%.

Jim

Thank you for your answer. What I can see from your answer is that one entity showed an increase in admin costs while the other entity showed a decrease ( accounting wise ). Is this a catch all category?
Excluding fuel, which are @ the same for every airline(ignoring hedges) and with BK reductions in pay and increased effeincey? Are they paying merger costs through this category? Why are we so high and what does admin mean?

 

[BoeingBoy]

The BTS doesn't define it (that I've found on their website), other than it's one of the operating expense catagories. The other's are Flying Operations, Maintenance, Passenger Service, Aircraft And Traffic Servicing, Depreciation And Amortization, Transport Related Expenses, and Total Operating Expenses.

Some of those are defined in more detail. For example, Passenger Service is defined as "Cost of activities contributing to the comfort, safety, and convenience of passengers while in flight or when flights are interrupted. Includes salaries and expenses of flight attendants and passenger food expenses." Maintenance is defined as "All expenses, both direct and indirect, specifically identifiable with the repair and upkeep of property and equipment."

Administrative seems relative straight-forward......all the "back office" work that isn't related to providing transportation like the HR department or the pass bureau. I assume that "General" is operating expenses that don't fit in any other category.

Jim