April numbers are in - down 3.5%

The silence is deafening.  I would think that by now we would have at least half a page explaining how this was planned by DL management to increase the moonthumbs per available seat gallon numbers.  (My all-time favorite bogus statistic.)
 
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Sorry to hear about the tough month, hopefully it's not a sign to come for all airlines in the April month. I do believe SWA has already predicted a 2% lower PRASM as well, but hoping it will turn to a positive after all the numbers are in.
 
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there is no silence... just solid data analysis.

I have repeatedly noted the weakness in int'l markets and that is exactly what DL is saying continues to be the challenge.

DL aggressively grew the Atlantic using twice the capacity they pulled out of Asia and strengthening its strategc objectives in the process.

the number 1 and number 2 carrier in the addition of seats in April across the Atlantic were DL and Virgin Atlantic.



While some carriers are using profits from low fuel prices to spend money on new airplanes, DL is using a chunk of its profits to grow its network.

AS and WN are using the same strategies largely in the domestic marketplace. AS' RASM has been down far more than DL's. Is AS' strategy bad?

speaking of AS, looks like DL will plow some of its fuel savings into starting SEA-MCO... should help fill seats to Asia and helps provide the platform for more Asia flights that do not also exist from DTW.
 
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WorldTraveler said:
there is no silence... just solid data analysis.
Good one!
Nice to see you haven't lost your sense of humor.

WorldTraveler said:
I have repeatedly noted the weakness in int'l markets and that is exactly what DL is saying continues to be the challenge.
I guess this is where having a large domestic presence comes in handy.
 
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When Delta adds huge amounts of empty capacity (DL's traffic in the Atlantic region actually fell even though lots of new capacity was added), that's a positive. That's a good thing.

When other airlines add capacity in areas where their network isn't as broad and where many people agree that they have to grow, that added capacity is foolish, even when traffic grows to fill that added capacity (at slightly lower yields/unit revenues).

tldr: If Delta does something, it's brilliant. If AA does something, it's stupid. It's like reading analysis written by a six year old.

Makes me dizzy just to read the spin.
 
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you're only dizzy because you haven't kept up with the discussion.

I have never said that it was a bad thing to grow capacity; never.

I have said that doing so and losing money is not a terribly sustainable business model.

DL is a very large airline across the Atlantic and their schedule is very peaked to the summer. It appears that DL took the capacity they pulled off the Pacific, grew it and added it to the Atlantic for the month of April.

But DL doesn't build its schedule just for April and they didn't provide RASM guidance just for April.

and neither does any other airline.

DL's RASM guidance for the quarter came out just a couple weeks before they reported their monthly report. it is highly unlikely that DL's RASM performance for the month was a surprise to anyone, esp. since the dollar relative to other currencies has been relatively stable for a couple months now.

DL has also been very profitable over the Atlantic for several years. The expectation is undoubtedly that yields and loads will strengthen going into the summer,

btw, DOT regional profitability data for the 4th quarter of 2014 is now out and it is one hot mess.

Not only did DL decide to report a net loss to the DOT over the Atlantic for the 4th quarter but it did so in every region despite being profitable as a company. DL took its 4th quarter reported net loss - most of which was driven by mark to market fuel hedge losses - not the actual booked losses - and apply it across its system.

For the full year 2014, DL reported a net profit in every region except Latin America - so I suppose the argument about throwing capacity where it can't make money does make some sense.

UA reported a large net loss in the Pacific in the 4th quarter and for the full year but was profitable in other regions.

Now for the interesting part. AA reported a MASSIVE loss $1 billion plus loss in Latin America for the 4th quarter and for the whole year - making AA's Latin America system the most unprofitable for any airline in 2014 and it also was the largest loss by any airline in any region for a number of years. US was profitable to Latin America and AA and US were profitable in every region including a large profit to Asia.

So either the regional profitability data is wrong or it says that the industry has truly been turned on its head -with AA's most profitable region becoming unprofitable and vice versa while DL and UA's investments in large Pacific operations are a noose around its neck.

I suspect for DL, the logic just as when they reported their hedge losses in the 4th quarter publicly is that they want to get the hedge losses off the books as quickly as possible which will make it far easier to show massive profits later this year.

So, the only dizziness is how the biggest int'l regions and strategies for EACH of AA, DL, and UA have become lead weights while other strategies are working well.

I'm sure you are really dizzy now.
 
swamt said:
Sorry to hear about the tough month, hopefully it's not a sign to come for all airlines in the April month. I do believe SWA has already predicted a 2% lower PRASM as well, but hoping it will turn to a positive after all the numbers are in.
yep. International is hurting. Domestic is still really strong. 
 
Currency is just one of the many reasons why it is so damn hard to run a profitable airline. You lose when the dollar is up and you lose when the dollar is down......
 
US airlines can adapt to changes in the domestic marketplace; it is much harder to do so with what is going on in other economies.

DL has long had a strong presence in the domestic marketplace and it is part of the reason why DL's int'l system is much more focused on domestic connections and also why DL has a higher percentage of US originating revenue on its int'l system than AA or UA.

It is also worth noting that DL is within a couple percent of AA and US on a combined basis on the domestic system and likely will return to the being the largest revenue domestic carrier this year based on forecast capacity and RASM trends.
 
topDawg said:
yep. International is hurting. Domestic is still really strong. 
 
Currency is just one of the many reasons why it is so damn hard to run a profitable airline. You lose when the dollar is up and you lose when the dollar is down......
unless youre DL  then its all brilliant and ok! 
 
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except no one said that, robbed.

I have said for almost a year that the int'l economy was softening and would affect major parts of int'l regions and that is absolutely true for Latin America and Asia.

I have never said that DL was exempt from the hurt- just that DL has been more aggressive in dealing with the Asia issues which is where DL is more exposed than in Latin America.

and again, DL is the ONLY one of the big 3 that provides MONTHLY RASM info so it is great to jump DL's butt when AA and UA don't and won't ever provide the level of detail that DL provides so there is no way to know how what DL is doing compares to AA and UA.

again, DL and WN provide monthly RASM performance. AA and UA do not.

if you or others want to jump DL for its performance, at least have the guts to tell your company to provide the same data to provide a basis for comparison.
 
None of this may matter and the airlines are taking note. The recent deferred delivery announcements are a harbinger of what is to come. Get ready for another recession. Trade deficit hit incredibly high numbers the other day and last months hiring was anemic. All the signs are there that we are about to see GDP contraction and we already have poor international performance. The Fed has devalued the dollar about as much as they can, so they don't have much ammo to fight it with. Terrible timing for Hillary because the recession will hit right as election season heats up.
 
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not sure about a full fledged recession in the US but a lot of the world is starting to reach for the Kleenex boxes.

China's economy is slowing down, some of the largest economies in Latin America are facing a couple years or more of stagnation, and the Fed chief is saying here that stock market values are probably overheated.

the airline industry is trying to break the cycle of, well, profit and loss cyclicality, but the difference this time around is that there are very different strategies within even the legacy sector about how to survive in the event of a downturn.

and then we have the issue of terrorists that can quickly change things for everyone for the worse.

You are right that good times rarely last for long.