American Airlines Group Reports Highest Quarterly Profit In Company History
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WorldTraveler
Corn Field
- Dec 5, 2003
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Brian,
I am sorry but there absolutely was a difference in the performance of just the big 4 airlines with respect to both revenue and fuel.
Here is revenue.
AA total revenue down 4.6%, RASM down 6.9%
DL total revenue up 1%, RASM down 4.6%
UA total revenue down 4%, RASM down 5.6%
WN total revenue up 2%, RASM down 4.7%.
regarding fuel, all-in price
AA $1.90/gallon
DL $2.40 (includes $600 million in hedge losses and a $90 million profit at the refinery.
UA $2.17 (includes hedge losses)
WN $2.02
It is worth noting that WN says it still has a hedge book loss of $1.3 billion at current prices while DL and UA both say they will be close to market prices from this point forward
So, there is not only a difference in revenue but also costs.
while those seem like little numbers, remember that a 1% difference in revenue on $10 billion amounts to $100 million. the difference in RASM between DL and AA - the two extremes of RASM performance among the big 4 - amounted to over $200 million. That is not an insignificant amount.
ON the fuel side, AA had fuel costs that were $500 million better than DL which had the most hedge losses, even though some were offset by a refinery profit.
Airlines have fought for decades to generate profit differences of even $100 million. These are not small numbers on either the cost or revenue side.
Finally, hopefully you realize that AA stock was down almost 7% today, by far the largest decline among the industry. DL's stock valuation is now 25% higher than AA's, the highest difference between the two in months.
Some may choose to ignore me but the facts are that Wall Street is concerned about AA's financial report and given that guidance is for revenue pressures to continue, there is a lot of reason why investors have to ask whether all airlines are the same in profit potential given that the big difference between the industry has been revenue generation and fuel costs. As fuel costs between the big 4 grow closer and closer, revenue numbers will matter more and more.
crazystnic
Veteran
- Sep 28, 2010
- 781
- 727
AA is doing exactly what i want them to do. They are defending there turf.. in DCA, DAL and other stations. Short term pain for long term gain.
Did it long ago and I must say it makes a huge difference not having to look at this constant Don'tExpectLuggageToArrive commercial. Now if everyone could stop commenting on his posts it would be like he is not here and he would eventually go away and haunt someone else's board (United?). Give it a try.Shafted said:
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
Wonder who is passing out negative votes to the investors who decided that AAL stock is not worth near as much after its earnings announcement that it was before.
Does anyone really think that stoning the truthtellers stops the reality of what exists in the marketplace, including the selloff of AAL stock that took place.
For a bonus question a few people here should graph stock performance relative to other airlines on the day that each carrier reported its earnings.
On the other hand, since truth is the casualty of feel good emotions, it won't happen here
AAL stock still went down 7% today - which lead the industry down - regardless of what happened on here or whether anyone here thinks someone is a troll for highlighting why.
Given today's announcement of the largest quarterly profit in company history, it's remarkable - though not at all surprising - to consider the juxtaposition between the doom and gloom from certain self-appointed experts here compared with the sentiments expressed today by those individuals actually charged with a legally-enforcable fiduciary responsibility to shareholders, which include (emphasis mine):
"One, we are really bullish. We would not have purchased $753 million of stock in the quarter at an average cost of $4.53 if we thought the stock wasn't worth more $43.53."
"We don't base our competition [...] on trying to maintain a certain margin. Our goal is to maximize our margins and do better than others. We are doing that now. We expect to continue that in the future."
"We have a lot of work ahead and we all know that, but we are really proud of what our team has done, one to come together as a team and two, to work through really difficult circumstances when you are two separate airlines but still produce really good operating performance for our customers. We are excited about the future as we get to be more and more like one airline. That is what we are focused on."
"One, we are really bullish. We would not have purchased $753 million of stock in the quarter at an average cost of $4.53 if we thought the stock wasn't worth more $43.53."
"We don't base our competition [...] on trying to maintain a certain margin. Our goal is to maximize our margins and do better than others. We are doing that now. We expect to continue that in the future."
"We have a lot of work ahead and we all know that, but we are really proud of what our team has done, one to come together as a team and two, to work through really difficult circumstances when you are two separate airlines but still produce really good operating performance for our customers. We are excited about the future as we get to be more and more like one airline. That is what we are focused on."
I have always said that AA will surpass Delta 's profits when AA is givin the same time frame out of BK, and they just did it. CONGRATS to all the AA employees for a very good job!!! Delta reported 1B for the 2Q and AA reports 1.7B for 2Q---AND--- It's earlier than predicted, fantastic job AA employees, keep up the great work...
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
if AA were at the same point in BK and operating their business comparable to DL, they would have accounted for income taxes AND paid profit sharing, both of which DL and WN are doing NOW.
DL accounted for $881 million in income taxes and over $400 million in profit sharing, just for this quarter alone.
AA also continues to prominently highlight its Venezuela currency holdings which will have to be devalued or written off unless Venezuela by some completely unknown stroke all of a sudden comes upon billions of dollars that they can use to pay off foreign companies; given that AA doesn't even accept Venezuela's currency for payment now, there is no reason why Venezuela should do anything for AA. $600 million for AA is as much as DL paid in its large settlement of hedge losses.
For industry comparison, DL and WN are simply in a completely different set of revenue and cost comparison.... both generated over 20% operating margins, accounted for (DL) or paid (WN) income taxes, and also paid profit sharing.
on an apples to apples comparison if both carriers both paid taxes and profit sharing, DL would have outperformed AA just as WN does on a margin basis.
Further, DL both for the quarter and year to date is now within a couple percent of AA in terms of size, having easily passed UA.
AA's strategy amidst a shrinking revenue environment ACROSS ITS NETWORK is to use its fuel cost advantage to shrink revenues, the same strategy UA used.
IN contrast, DL and WN BOTH grew revenues - DL by 1%, WN by 2% despite the fact that WN doesn't even fly to Europe, Asia, or S. America where the strong dollar has had an enormous impact on US carrier profitability in those regions.
DL or WN didn't pick a number off of an excel spreadsheet and said these will be their margins of one type or another... no one expects AA or any company would do anything other than take advantage of every opportunity, deal with every challenge, and get the highest margin they can wherever they can.
so, no, AA and DL aren't anywhere close to being at the same place.
but more significantly, to say so is completely opposite of what AA's own execs said in acknowledging that they are behind their peers including DL who merged years ago. (those who are so afraid of hearing comparisons should note that AA exes themselves make those comparisons)
No one has said a thing about doom and gloom for AA. If it makes you feel better thinking that I or anyone else said, go for it. It is just not any more reality than to believe that AA and DL make comparable profits.
The future is exciting for AA. No one said otherwise.
But the competition is also moving forward, AA continues to face a disproportionately large amount of competition in its key markets, and Wall Street yesterday clearly recognized that while the future may be bright, AA is not in the same position as other competitors who saw completely different stock movements the day of their earnings announcements.
DL accounted for $881 million in income taxes and over $400 million in profit sharing, just for this quarter alone.
AA also continues to prominently highlight its Venezuela currency holdings which will have to be devalued or written off unless Venezuela by some completely unknown stroke all of a sudden comes upon billions of dollars that they can use to pay off foreign companies; given that AA doesn't even accept Venezuela's currency for payment now, there is no reason why Venezuela should do anything for AA. $600 million for AA is as much as DL paid in its large settlement of hedge losses.
For industry comparison, DL and WN are simply in a completely different set of revenue and cost comparison.... both generated over 20% operating margins, accounted for (DL) or paid (WN) income taxes, and also paid profit sharing.
on an apples to apples comparison if both carriers both paid taxes and profit sharing, DL would have outperformed AA just as WN does on a margin basis.
Further, DL both for the quarter and year to date is now within a couple percent of AA in terms of size, having easily passed UA.
AA's strategy amidst a shrinking revenue environment ACROSS ITS NETWORK is to use its fuel cost advantage to shrink revenues, the same strategy UA used.
IN contrast, DL and WN BOTH grew revenues - DL by 1%, WN by 2% despite the fact that WN doesn't even fly to Europe, Asia, or S. America where the strong dollar has had an enormous impact on US carrier profitability in those regions.
DL or WN didn't pick a number off of an excel spreadsheet and said these will be their margins of one type or another... no one expects AA or any company would do anything other than take advantage of every opportunity, deal with every challenge, and get the highest margin they can wherever they can.
so, no, AA and DL aren't anywhere close to being at the same place.
but more significantly, to say so is completely opposite of what AA's own execs said in acknowledging that they are behind their peers including DL who merged years ago. (those who are so afraid of hearing comparisons should note that AA exes themselves make those comparisons)
No one has said a thing about doom and gloom for AA. If it makes you feel better thinking that I or anyone else said, go for it. It is just not any more reality than to believe that AA and DL make comparable profits.
The future is exciting for AA. No one said otherwise.
But the competition is also moving forward, AA continues to face a disproportionately large amount of competition in its key markets, and Wall Street yesterday clearly recognized that while the future may be bright, AA is not in the same position as other competitors who saw completely different stock movements the day of their earnings announcements.
actually not - since profit sharing is not a uniform method of compensation - remember hardly any companies pay profit sharing so let's go through the facts - holding profit sharing over AA's head is beyond a dead horse - not sure there are any bones left - once again what is the percentage of companies in the US (every single company in the entire US - it's a minority of companies paying profit sharing) - one keeps forgetting profit sharing is an expense the company must account for in their financials
AA is larger than DL
AA made more revenue and net income - even worst if you back out the revenue DL gets from the outsourcing they do and the oil refinery
AA still has not extracted all the expense saves out from the merger so they will drop expenses even mor
While everyone on here admits AA has many more things to do others can not bring themselves to celebrate all the accomplishments
What I think is most important AA can admit the challenges it has and sets out to fix them where another airline and it's promoter can't admit one thing it needs to work on - I will take forthright assessments from a mgmt team over a mgmt team unable to be forthright (let's go through one example):
One airline came out early and said PRASM was softening - we heard over and over how that airline was horrible - then the beloved DL announced a quarterly number with reduced PRASM - at least one airline was forthright
AA is larger than DL
AA made more revenue and net income - even worst if you back out the revenue DL gets from the outsourcing they do and the oil refinery
AA still has not extracted all the expense saves out from the merger so they will drop expenses even mor
While everyone on here admits AA has many more things to do others can not bring themselves to celebrate all the accomplishments
What I think is most important AA can admit the challenges it has and sets out to fix them where another airline and it's promoter can't admit one thing it needs to work on - I will take forthright assessments from a mgmt team over a mgmt team unable to be forthright (let's go through one example):
One airline came out early and said PRASM was softening - we heard over and over how that airline was horrible - then the beloved DL announced a quarterly number with reduced PRASM - at least one airline was forthright
1AA
Veteran
Let's look at the record breaking second quarter profit by the numbers.
WARNING: These numbers may be upsetting and might cause distress or other signs of discust. You have been warned.
$1,900,000,000.00 (1.9 Billion) Eight Zeros not including the pennies. That's the left over we get as employees.
2nd quarter = 91 days.
$20,879,120 per day.
Hourly:
$869,963 per hour.
By the minute:
$14,499 each minute.
By the second:
$241 every second.
I'm glad to have done my part in the success of the New American Airlines.
WARNING: These numbers may be upsetting and might cause distress or other signs of discust. You have been warned.
$1,900,000,000.00 (1.9 Billion) Eight Zeros not including the pennies. That's the left over we get as employees.
2nd quarter = 91 days.
$20,879,120 per day.
Hourly:
$869,963 per hour.
By the minute:
$14,499 each minute.
By the second:
$241 every second.
I'm glad to have done my part in the success of the New American Airlines.
NewHampshire Black Bears
Veteran
swamt said:
As an AA retiree, I thank you swamt for your good wishes and very wise comment.
In my somewhat biased view,.......... the Del - DUH mystique goes something like this. DL OBVIOUSLY 'snared' a Gigantic Plum with thier Richard Anderson and Doug Steenland collaborative coercion by raping a Great company like NORTHWEST, thats a given.
But in the end, as the old saying goes, " you can put lipstick on a Pig, but it's still a PIG" , meaning DL is was and most likely will be a ' # 3 ' (with a decent shot of a # 2 due to UA being the 'bumbling Idiots' that they are more times that not)
When you look at another plus for DL, thier big global sky team partner (air France) was also a big plus,...B U T, on Air Frances Best day, they will always suck hind tit to BRITISH AIRWAYS. Now through in KLM and combined.....AF and KLM still do NOT equal a BA ! Once the AA/US "deck is finally and completely shuffled together", AA will return to its true position of # 1.
As the old saying goes.................." champions are BORN, ...not BRED "
Something similiar is you guys at SW. I'm sure your tired of hearing about Jet Blue (another SW "type" airline.) None of those type airlines will EVER become # 1 over you guys.
Again, another example of "BORN vs BRED" !
Black Magic
Veteran
- Jan 4, 2008
- 937
- 552
So much for all the armchair ceo's saying airline mergers dont work. The usual merger protesters on here saying merger wont happen because of incompatible fleets, hubs to close together, blah blah...STFU!!
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