Fuel Expense Comparison last quarter

jcw

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Aug 12, 2004
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Here is the breakdown of the fuel expenses for this last quarter per gallon:
 
AA               $1.67
Airline 1       $1.70 *
Airline 2       $1.82 *
Airline 3       $1.89 *
 
 
* tried to use the lowest number reported however all adjusted to exclude things vs pure AA number
 
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I'm going to disagree with jcw on this. I agree with the AA number, as the consolidated 3rdQ mainline and regional fuel expense was $1.67, and thus, so was the consolidated fuel expense. As the mainline airlines all pay for the regionals' fuel, seems appropriate to me to use the consolidated number for the other airlines when comparing to AA. Apologies to jcw if the numbers above are the consolidated numbers.

As for adjustments, I exclude the MTM adjustments for hedge losses that might occur in future periods (GAAP requires them, but they're speculative since no cash is paid until the contracts mature), but I include the hedge losses actually incurred during the quarter since cash is paid if the hedges are underwater, and in the case of the refinery-owning airline, I include the gains from the refinery.

For the third quarter, the numbers are as follows:

AA 1.67
DL 1.89
UA 1.97
wN 2.20

For the first nine months, the numbers are as follows:

AA 1.80
DL 1.95
UA 2.08
WN 2.08

In the third quarter, WN saw $0.50/gal in cash losses on bad hedges, and still has $1.2 billion of bad hedges for future periods if fuel stays at current prices. During the past year and into the next couple of years, WN may give back almost all of the fuel hedging gains it famously recognized during the 2003-2008 fuel price runup.

WN's hedging losses may end up being equivalent to 40 to 50 new 737s.

Given the huge fuel hedging losses inflicted on DL, WN and UA in this round of fuel price collapse, I wonder if those airlines will re-think fuel hedging. Parker's gamble to not hedge has paid off very well, easily saving AA $2 billion or more in the last 12 months.
 
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I don't think you are disagreeing - I just used the lowest number the others backed into vs the pure number AA reported
 
I agree with your numbers - I was giving the other airlines some benefit of the doubt for the adjustments they made
 
The good news the refinery is really helping one airline get their fuel cost to be the lowest of all the majors
 
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jcw said:
Here is the breakdown of the fuel expenses for this last quarter per gallon:
 
AA               $1.67
Airline 1       $1.70 *
Airline 2       $1.82 *
Airline 3       $1.89 *
 
 
* tried to use the lowest number reported however all adjusted to exclude things vs pure AA number
 
 
jcw said:
The good news the refinery is really helping one airline get their fuel cost to be the lowest of all the majors
 
52719402.jpg

 
I am a little surprised that the fankid on the carrier which owns the refinery has not come up with multiple posts spinning the numbers.
I'm not going to believe he's speechless.
 
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the reason why the "fankid with the refinery airline" hasn't weighed in is because FWAAA nailed it... and more significantly, all of those that were so certain that DL had really screwed up a year ago can now see how quickly DL took its medicine and moved on.

and the big surprise to some people, which I have pointed out and FWAAA reinforces is that WN has SIGNIFICANT bad hedges which they will continue to have to deal with.

and above all of these fuel numbers, it is noteworthy that there is actually a pretty strong inverse correlation between bad fuel hedges over the past year and operating profits and that is precisely because revenue generation continues to be a very huge and much larger portion of profitability.

AA didn't have to worry about fuel hedges but it has been at the bottom of the industry in revenue production. So, thank your lucky stars that Parker got fuel hedging right - but the revenue issues are absolutely far larger.

and finally, the size of hedge losses at other airlines, including WN, on a quarterly basis at this point aren't going to make or break profits. the big 4 airlines are all operating in a far tighter profit, cost, and revenue generation range than they have in a very long time.
 
FrugalFlyerv2.0 said:
I am a little surprised that the fankid on the carrier which owns the refinery has not come up with multiple posts spinning the numbers.
I'm not going to believe he's speechless.
Any time Delta blows billions for stupid reason WT will show up to defend that mistakes.

Management can get away with murder at DL, any other airline (or the employee group at DL) does one tinny little thing wrong, they are worthless!
 
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WorldTraveler said:
the reason why the "fankid with the refinery airline" hasn't weighed in is because FWAAA nailed it... and more significantly, all of those that were so certain that DL had really screwed up a year ago can now see how quickly DL took its medicine and moved on.
 
 
So that medicine consisted of cash infusions to the refinery so that several (more) years of operational losses are incurred, followed by the long term side-effect of still paying more for fuel.
 
Winner!
 
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The refinery is profitable and has been on a cumulative basis.

quit making a fool of yourself and mocking something that has been a success and continues to be.

I am not defending DL's fuel hedge losses. I am saying, and you aren't capable of seeing it, dawg, that DL pushed into revenue generation mode to overcome its fuel hedge losses and that is what they did and it worked.

DL is now paying fuel prices in line with the rest of the industry so is slowing capacity growth

DL's operating margin has exceeded its peers for most of the past year. If DL had really screwed it up, then it would show up on the bottom line. but that hasn't been the case at all.
 
FWAAA said:
I'm going to disagree with jcw on this. I agree with the AA number, as the consolidated 3rdQ mainline and regional fuel expense was $1.67, and thus, so was the consolidated fuel expense. As the mainline airlines all pay for the regionals' fuel, seems appropriate to me to use the consolidated number for the other airlines when comparing to AA. Apologies to jcw if the numbers above are the consolidated numbers.

As for adjustments, I exclude the MTM adjustments for hedge losses that might occur in future periods (GAAP requires them, but they're speculative since no cash is paid until the contracts mature), but I include the hedge losses actually incurred during the quarter since cash is paid if the hedges are underwater, and in the case of the refinery-owning airline, I include the gains from the refinery.

For the third quarter, the numbers are as follows:

AA 1.67
DL 1.89
UA 1.97
wN 2.20

For the first nine months, the numbers are as follows:

AA 1.80
DL 1.95
UA 2.08
WN 2.08

In the third quarter, WN saw $0.50/gal in cash losses on bad hedges, and still has $1.2 billion of bad hedges for future periods if fuel stays at current prices. During the past year and into the next couple of years, WN may give back almost all of the fuel hedging gains it famously recognized during the 2003-2008 fuel price runup.

WN's hedging losses may end up being equivalent to 40 to 50 new 737s.

Given the huge fuel hedging losses inflicted on DL, WN and UA in this round of fuel price collapse, I wonder if those airlines will re-think fuel hedging. Parker's gamble to not hedge has paid off very well, easily saving AA $2 billion or more in the last 12 months.
 
FWAAA,
A request plz.
Would you please post  pure profits  for AA  in ......Q1....Q2....and  Q3,
And,
The same for UAL and Del  DUH.
I KNOW I'm being a 'pain-in-the-arse' with this, but I'd really appreciate it !
 
(The OLD Bear)   THANX  you in advance !!!!!!!!!!!!!!
 
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