- Dec 5, 2003
- 21,709
- 10,721
All US airlines report data to the DOT on a quarterly basis. There are four regions reported: domestic, Atlantic, Latin, and Pacific. Revenues and expenses per available seat mile are reported which yields a profit or loss per ASM by airline for each region.
Here are the results for the network carriers for 2Q06. I’ll profit a ranking by region in descending order with the profit or loss by ASM for the highest and lowest carriers as well as any losses and then a commentary for each airline.
Domestic:
NW (2.46), DL, US, UA, AA, CO (-0.13)
Atlantic
US (5.74)***, CO, AA, NW, UA, DL (-0.10)
*** number looks suspect… US’s yield is 25% higher than any other carrier’s and Atlantic costs for US are the highest of any carrier’s – completely backwards of last year.
Latin
CO (2.84), US, AA, UA, (-0.39) DL (-.66)
Pacific
DL (1.75), CO, UA,, AA (-0.46), NW (-1,31)
Total system
US (2.31), NW, DL CO, AA, UA (0.73)
Commentary by carrier:
AA – London is AA’s bread and butter. AA’s transatlantic Profit per ASM is 3X larger than on its domestic system. Latin is a strong contributor but CO is more profitable to Latin America. AA’s recent cutbacks to Asia are obvious since its Pacific operation is the only money losing region for AA.
CO- CO’s Atlantic and Latin systems are solid performers with over 2.5 cents of profit per ASM in those regions. The Pacific profit is relatively small at .62 but no one reported strong Asian profits; CO’s Asian profits were about 25% of what they were last year – indications that CO’s growth is coming at a cost. CO lost money on its domestic system (the only carrier that did), just as it did one year ago, although this year’s loss is much smaller. This shows why CO is so opposed to Virgin America. CO’s domestic problem is costs.
DL – DL’s domestic system drove its profits. DL’s aggressive growth to Europe and Latin America sent its costs up much faster than its yields on a year over year basis. DL’s Atlantic was profitable last year while its domestic system lost money – the opposite of what happened this year. DL’s Atlantic losses were 0.10 cents per ASM, the smallest loss of any carrier in any region. DL’s yields did grow but it is obvious that there are high start up costs that eroded DL’s profitability. DL will have to be more careful about managing costs as it continues to grow internationally but indications are that the revenue is materializing on its new routes. DL had the highest operating margin on the Pacific where no carrier did terribly well. It does indicate why DL feels comfortable about expanding in Asia, esp. from Atlanta.
NW – NW’s domestic system was the most profitable of any carrier thanks to its capacity reduction and aggressive cost cutting. The Atlantic was solidly profitable. NW’s losses to Asia were only about 25% less this year so the Asian system is still a drag on NW.
UA – UA’s domestic system came in ahead of AA’s and CO’s thanks to strong revenues. UA is getting the revenue premiums necessary to match its high costs. UA continues to lose money to Latin America, although this year’s losses are about half of last year’s. The Atlantic is profitable but is better only than DL’s. UA’s Pacific generated a small (0.18) profit.
US – US was the only carrier that was profitable in every reporting region. Data for US’s transatlantic region looks suspect although they still could have been profitable. US’ is shrinking itself to profitability on its domestic and Latin systems but is apparently finding strong growth prospects to Europe.
Commentary by region:
It is apparent that just about every carrier that shrunk capacity was profitable in that region while those that expanded lost money. Capacity isn’t included in this DOT data but it does indicate that each carrier is restructuring based on where it expects its profits to come from and in some cases is willing to take a hit now for a stronger long-term route system.
Domestic – clearly this is what drives profitability. Every US carrier is still predominantly domestic. The strongest results here translated into the strongest overall profits. DL lost money on most of its international system due to aggressive growth but reported industry average profits because of strong domestic performance – driven by cost cuts and revenue growth. On the other hand, CO could not use its strong int’l performance to offset its domestic losses, landing it in next to last place among domestic carriers in total profits. CO’s domestic growth to counter other airlines will likely continue to suppress its domestic results.
Atlantic – CO’s Atlantic profits remained strong. AA and NW with strong, concentrated European route systems did well. UA’s transatlantic system is profitable although shrinking.
Latin – CO shines here and makes money about 3 times faster than AA. DL is obviously growing to capture share but it is costly. DL’s Latin system last year was breakeven. Much of the growth is coming to resort destinations which do not do well for most of the 2nd quarter so timing might be an issue. US has found the right size in Latin America while UA’s shrinking Latin system still loses money.
Pacific – It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia. Results seem to say otherwise. AA’s aggressive growth by AA and CO hurt their results. NW’s lack of investment shows in its continued poor Pacific results. UA’s profits are small but constant. UA’s costs are high for a region with flights that long.
Here are the results for the network carriers for 2Q06. I’ll profit a ranking by region in descending order with the profit or loss by ASM for the highest and lowest carriers as well as any losses and then a commentary for each airline.
Domestic:
NW (2.46), DL, US, UA, AA, CO (-0.13)
Atlantic
US (5.74)***, CO, AA, NW, UA, DL (-0.10)
*** number looks suspect… US’s yield is 25% higher than any other carrier’s and Atlantic costs for US are the highest of any carrier’s – completely backwards of last year.
Latin
CO (2.84), US, AA, UA, (-0.39) DL (-.66)
Pacific
DL (1.75), CO, UA,, AA (-0.46), NW (-1,31)
Total system
US (2.31), NW, DL CO, AA, UA (0.73)
Commentary by carrier:
AA – London is AA’s bread and butter. AA’s transatlantic Profit per ASM is 3X larger than on its domestic system. Latin is a strong contributor but CO is more profitable to Latin America. AA’s recent cutbacks to Asia are obvious since its Pacific operation is the only money losing region for AA.
CO- CO’s Atlantic and Latin systems are solid performers with over 2.5 cents of profit per ASM in those regions. The Pacific profit is relatively small at .62 but no one reported strong Asian profits; CO’s Asian profits were about 25% of what they were last year – indications that CO’s growth is coming at a cost. CO lost money on its domestic system (the only carrier that did), just as it did one year ago, although this year’s loss is much smaller. This shows why CO is so opposed to Virgin America. CO’s domestic problem is costs.
DL – DL’s domestic system drove its profits. DL’s aggressive growth to Europe and Latin America sent its costs up much faster than its yields on a year over year basis. DL’s Atlantic was profitable last year while its domestic system lost money – the opposite of what happened this year. DL’s Atlantic losses were 0.10 cents per ASM, the smallest loss of any carrier in any region. DL’s yields did grow but it is obvious that there are high start up costs that eroded DL’s profitability. DL will have to be more careful about managing costs as it continues to grow internationally but indications are that the revenue is materializing on its new routes. DL had the highest operating margin on the Pacific where no carrier did terribly well. It does indicate why DL feels comfortable about expanding in Asia, esp. from Atlanta.
NW – NW’s domestic system was the most profitable of any carrier thanks to its capacity reduction and aggressive cost cutting. The Atlantic was solidly profitable. NW’s losses to Asia were only about 25% less this year so the Asian system is still a drag on NW.
UA – UA’s domestic system came in ahead of AA’s and CO’s thanks to strong revenues. UA is getting the revenue premiums necessary to match its high costs. UA continues to lose money to Latin America, although this year’s losses are about half of last year’s. The Atlantic is profitable but is better only than DL’s. UA’s Pacific generated a small (0.18) profit.
US – US was the only carrier that was profitable in every reporting region. Data for US’s transatlantic region looks suspect although they still could have been profitable. US’ is shrinking itself to profitability on its domestic and Latin systems but is apparently finding strong growth prospects to Europe.
Commentary by region:
It is apparent that just about every carrier that shrunk capacity was profitable in that region while those that expanded lost money. Capacity isn’t included in this DOT data but it does indicate that each carrier is restructuring based on where it expects its profits to come from and in some cases is willing to take a hit now for a stronger long-term route system.
Domestic – clearly this is what drives profitability. Every US carrier is still predominantly domestic. The strongest results here translated into the strongest overall profits. DL lost money on most of its international system due to aggressive growth but reported industry average profits because of strong domestic performance – driven by cost cuts and revenue growth. On the other hand, CO could not use its strong int’l performance to offset its domestic losses, landing it in next to last place among domestic carriers in total profits. CO’s domestic growth to counter other airlines will likely continue to suppress its domestic results.
Atlantic – CO’s Atlantic profits remained strong. AA and NW with strong, concentrated European route systems did well. UA’s transatlantic system is profitable although shrinking.
Latin – CO shines here and makes money about 3 times faster than AA. DL is obviously growing to capture share but it is costly. DL’s Latin system last year was breakeven. Much of the growth is coming to resort destinations which do not do well for most of the 2nd quarter so timing might be an issue. US has found the right size in Latin America while UA’s shrinking Latin system still loses money.
Pacific – It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia. Results seem to say otherwise. AA’s aggressive growth by AA and CO hurt their results. NW’s lack of investment shows in its continued poor Pacific results. UA’s profits are small but constant. UA’s costs are high for a region with flights that long.
