Lower Casm Than Wn?

[BoeingBoy]

As I've mentioned before, the government (specifically the Bureau of Transportation Statistics) collects reams of data from the airlines. Quarterly, they put out "Airline Financial Data" for the larger airlines in three catagories - network, low cost, and regional.

This report is for the domestic system of each of the covered airlines. Let me say that again - it's for the DOMESTIC SYSTEM of each carrier. Therefore, the express components of each carrier are included in the figures - something U doesn't report.

By excluding international operations, the costs reported for the network carriers are higher than what the carriers themselves report for their mainline operations, how much depending on the breath of each carriers international ops.

But since the LCC's operate primarily (or exclusively) domestic systems, it does make for a decent comparison.

So, here's what the BTS says about unit costs....

Qtr 1Q02, 2Q02, 3Q02, 4Q02, 1Q03, 2Q03, 3Q03, 4Q03, 1Q04, 2Q04
US 16.10, 15.70, 14.40, 15.80, 15.70, 16.20, 15.35, 15.91, 16.04, 15.95
NW 11.20, 11.10, 11.20, 13.30, 11.70, 11.30, 10.79, 11.67, 13.05, 13.49
DL 10.70, 10.30, 10.10, 10.60, 13.40, 13.90, 13.32, 13.29, 13.92, 13.48
UA 12.00, 11.80, 11.30, 12.60, 11.90, 11.00, 11.19, 11.69, 12.16, 11.88
AA 11.50, 10.90, 12.30, 11.10, 13.10, 12.10, 11.00, 11.89, 11.14, 11.18
CO 12.20, 12.30, 11.10, 11.20, 11.80, 09.70, 10.37, 11.11, 11.28, 11.04
AL 10.50, 09.90, 10.00, 11.00, 10.70, 09.80, 09.34, 10.37, 10.85, 10.22
HP 09.50, 07.80, 07.80, 08.10, 08.20, 07.90, 07.62, 07.82, 07.63, 08.28
WN 07.30, 07.50, 07.40, 07.50, 07.50, 07.70, 07.50, 07.67, 07.81, 08.08
B6 06.80, 06.30, 06.40, 06.30, 06.20, 06.10, 05.92, 06.07, 06.06, 05.93

These are ranked by 2Q04 CASM.
All figures are in cents.

As you can see, our domestic system CASM is nearly double WN's (and they've reported a 3Q04 CASM near 7.5 cents), 2-1/2 times B6's, almost double HP's, and still the highest in the industry.

Jim

 

[whlinder]

Its sad when posts such as the above contain actual facts and get no responses. Where are you A320 to spin this?

 

[USA320Pilot]

Whlinder:

The table above provides information for mainline domestic operations only and does not reflect total system wide unit costs, which is unfair and somewhat misleading when trying to a conparision.

It would be a better argument to go into each airline's quarterly report and extract the numbers to compare total system wide CASM.

For example, US Airways’ crown jewel is its Caribbean/Latin America network that is excluded in the numbers. Furthermore, the report does not provide Transatlantic, Express, or MDA data that averages down unit costs. In addition, MDA is expected to quadruple once EMB-170 delivery’s resume, and EMB-190s arrive, which will have a dramatic effect on total costs.

The company’s new annual cost cut target is $1.65 billion per year, with about $950 million coming from labor and $700 million in operational changes such as point-to-point flying, facility consolidation (training and reservation facilities), airport gate rejection, PIT hub closure, reduced reservation call time, reduced distribution costs, fleet rationalization, PHL rolling hub, two new banks in CLT, and IT improvements.

Respectfully,

USA320Pilot

 

[FA Mikey]

Even with your crown jewels, U is so far out of the league of beating or matching SW on any level.

Isn't it a shame for the wasted 700 million dollars by not making these changes earlier. I guess though if they had, it would have been so easy to push the company in for another round in BK court. As well as another round of rape and pillage of employee compensation. Except for the pilots who seem to bend over on command.

Don't forget to add all the millions of dollars a month they will save after BK. All those lawyers fees.

 

[WNjetdoc]

As I've mentioned before, the government (specifically the Bureau of Transportation Statistics) collects reams of data from the airlines. Quarterly, they put out "Airline Financial Data" for the larger airlines in three catagories - network, low cost, and regional.

This report is for the domestic system of each of the covered airlines. Let me say that again - it's for the DOMESTIC SYSTEM of each carrier. Therefore, the express components of each carrier are included in the figures - something U doesn't report.

By excluding international operations, the costs reported for the network carriers are higher than what the carriers themselves report for their mainline operations, how much depending on the breath of each carriers international ops.

But since the LCC's operate primarily (or exclusively) domestic systems, it does make for a decent comparison.

So, here's what the BTS says about unit costs....

Qtr 1Q02, 2Q02, 3Q02, 4Q02, 1Q03, 2Q03, 3Q03, 4Q03, 1Q04, 2Q04
US 16.10, 15.70, 14.40, 15.80, 15.70, 16.20, 15.35, 15.91, 16.04, 15.95
NW 11.20, 11.10, 11.20, 13.30, 11.70, 11.30, 10.79, 11.67, 13.05, 13.49
DL 10.70, 10.30, 10.10, 10.60, 13.40, 13.90, 13.32, 13.29, 13.92, 13.48
UA 12.00, 11.80, 11.30, 12.60, 11.90, 11.00, 11.19, 11.69, 12.16, 11.88
AA 11.50, 10.90, 12.30, 11.10, 13.10, 12.10, 11.00, 11.89, 11.14, 11.18
CO 12.20, 12.30, 11.10, 11.20, 11.80, 09.70, 10.37, 11.11, 11.28, 11.04
AL 10.50, 09.90, 10.00, 11.00, 10.70, 09.80, 09.34, 10.37, 10.85, 10.22
HP 09.50, 07.80, 07.80, 08.10, 08.20, 07.90, 07.62, 07.82, 07.63, 08.28
WN 07.30, 07.50, 07.40, 07.50, 07.50, 07.70, 07.50, 07.67, 07.81, 08.08
B6 06.80, 06.30, 06.40, 06.30, 06.20, 06.10, 05.92, 06.07, 06.06, 05.93

These are ranked by 2Q04 CASM.
All figures are in cents.

As you can see, our domestic system CASM is nearly double WN's (and they've reported a 3Q04 CASM near 7.5 cents), 2-1/2 times B6's, almost double HP's, and still the highest in the industry.

Jim

[post="193842"][/post]​

"Despite the weak airline industry revenue environment and higher fuel prices, Southwest achieved a double-digit improvement in earnings," stated Gary C. Kelly, Chief Executive Officer. "Our third quarter operating cost performance was excellent, which significantly contributed to these results. I am extremely proud of our Employees and their enormous efforts to lower our cost structure and raise our productivity. Even with average fuel prices up over 10 percent, third quarter 2004 unit costs increased only 1.3 percent. Our hedging program greatly mitigated record-high fuel prices, which resulted in a reduction in operating expenses of $131 million (or $73 million net of profitsharing and income tax effects) for third quarter 2004.

"Excluding fuel, our unit costs were flat with the year ago quarter and well below first half 2004, which represents a significant improvement in cost trends. We are on track with our cost reduction targets and expect fourth quarter 2004 unit costs, excluding fuel, to decline from fourth quarter 2003's performance of 6.51 cents.

"In today's airline industry, low costs are imperative to remain profitable. Low fares are our most important competitive weapon and what Customers demand. We are determined to maintain our position as the low cost producer and the Low Fare Airline in America.

****You can believe we are very active at lowering our costs even more, we are not sitting fat and happy. A lean, mean, fighting machine is our mantra.

 

[TomBascom]

What are the corresponding revenue numbers?

 

[USA320Pilot]

FA Mikey:

As a Flight Attendant from American Airlines I find your comments interesting and somewhat self serving. What's the problem? Are you a little scared? I agree there are bankruptcy costs, which Delta and most likely American are going to find out about too.

Separately, Tom has a good point regarding RASM, where US Airways is an industry leader. Moreover, the single biggest cost reduction item that I neglected to mention is increased aircraft utilization -- starting in February.

Regards,

USA320Pilot

 

[wings396]

One thing that we can be sure of, is that our wages are lower than theirs! Even at this point the Company wants to squeeze even more out of our pockets.

 

[FA Mikey]

FA Mikey:

As a Flight Attendant from American Airlines I find your comments interesting and somewhat self serving. What's the problem? Are you a little scared? I agree there are bankruptcy costs, which Delta and most likely American are going to find out about too.

Separately, Tom has a good point regarding RASM, where US Airways is an industry leader. Moreover, the single biggest cost reduction item that I neglected to mention is increased aircraft utilization -- starting in February.

Regards,

USA320Pilot

[post="194355"][/post]​

Oh Please you want to talk about self serving. That's rich! I am merely pointing out that there is no way U can achieve cost lower than SWA. You guys like AA cannot possibly given the fact that we are operating on different levels and the inefficacy and added costs of operating a number of different aircraft and configurations.

A320 you are living in some fantasy world. Were you actually believe you can make things happen or come true, by simply typing over enough times.

 

[USAirUnited]

Wonder if they still durg test our pilots. Cause A320 is on some stuff. What a vivid imagination.

 

[AAviator]

Wonder if they still durg test our pilots. Cause A320 is on some stuff. What a vivid imagination.

[post="194371"][/post]​

I've had the misfortune of meeting 320 on 2 occasions. He speaks differently in person than he ever would on theis forum. Although, everyone has him nailed anyway...

"I've got 11 years left, after that I don't care what happens."


"I'm in the top 1/3rd of the seniority list, the company would have to go away for it to affect me."

" We've got a sugar-daddy in alabama."

 

[TomBascom]

The table above provides information for mainline domestic operations only and does not reflect total system wide unit costs...

Jim specifically said that it *includes* express:

This report is for the domestic system of each of the covered airlines. Let me say that again - it's for the DOMESTIC SYSTEM of each carrier. Therefore, the express components of each carrier are included in the figures

... which is unfair and somewhat misleading when trying to a conparision.

I cannot think of a more germane set of numbers that better illustrates where the problem lies and how severe it is.

But it is incomplete without the corresponding revenue data.

 

[whlinder]

US Airway's crown jewel is the Caribbean/Latin America? Whatever happened to the Northeast and being dominant at DCA/PHL/LGA/BOS?

Anyway, Tom has an excellent point about RASM, since CASM really doesn't matter if you can get your RASM to exceed it. But since A320 has declared that US *could* get their CASM below WN's, I (and others) have focused specifically on that part of the equation.

So the report leaves out US' international ops. While these are certainly important to US' operation, WN and other LCCs are putting US on the brink of oblivion. WN doesn't fly outside the country, and B6 and FL have a limited Caribbean presence. So head to head, US is getting killed on cost by these guys. US can make up some of that disadvantage with lower costs and higher revenue through international ops, but they can't have their lunch eaten domestically like this if they want to continue to exist.

As you said A320

The company’s new annual cost cut target is $1.65 billion per year, with about $950 million coming from labor and $700 million in operational changes such as point-to-point flying, facility consolidation (training and reservation facilities), airport gate rejection, PIT hub closure, reduced reservation call time, reduced distribution costs, fleet rationalization, PHL rolling hub, two new banks in CLT, and IT improvements.

the airline is planning on cutting costs, which is a good thing and something it needs to do. However, I still don't think it is enough to be competitive with WN on a CASM level, nor do I think that with the revenue reductions forthcoming from system-wide Go-Fares (if it ever happens) will produce enough revenue to offset US' costs. All those improvements are good. But how can you expect to have a lower CASM than WN when:

1. WN reported that employee wages account for 3.1 cents /seat mile in their 2003 annual report. US reported in their recent bankruptcy filing that employee wages made up 4.0 cents/seat mile. US workers make less $$$ than their WN counterparts, so why is this? The new wage reductions should take the US number down, and WN's is probably on the rise, but how can US pay their workers LESS than WN but still have them cost more per seat mile? Hmmm, perhaps the operation is still too complex?

2. WN is hedged 80% on fuel next year for $26/barrel IIRC. You have mentioned US is hedged 35%. I haven't looked to see what the reality is, but there is no way on earth US is as well hedged as WN.

3. US interlines and codeshares, WN does not.

4. WN has simple fares, simple operations. US does not.

5. WN has 1 fleet type, US has multiple types.

6. WN has a simple frequent flyer program, US has a complex one.

7. WN has an all-coach fleet, US has the complexity of F class.

8. WN has a simplified distribution model, US does not.

So on #1, the two airlines will be about equal, #2 WN is way lower than US, and #3-8, while US will be reducing these costs by improving efficiency, they will not get them below WN. So how on earth is US going to get a lower CASM that WN?

US has to find a way to extract more revenue from #3-8. But they don't seem to have a plan for that.

 

[eolesen]

Anyone who believes that U can get their CASM below WN's is a fool. Aircraft ownership costs alone make that impossible.

WN has excellent credit, and lenders actually compete to offer them financing.

US, on the other hand, is lucky to get anyone to offer them financing, and where they do, they're going to pay above-market rates to get it because of the risk they pose.

 

[markkus757]

Is it me or isn't the TP kinda obsolete anyways? Does anybody believe that the cost of oil is going back to their(US's) estimates anytime soon? Why not just ask China and India to stop industrializing and ask the treehuggers to let them modernize a few refineries. That should solve the equation.