Lower Casm Than Wn?

[BoeingBoy]

Where to start?

USA320Pilot:

"the report does not provide Transatlantic, Express, or MDA data that averages down unit costs."

Transatlantic would indeed lower the CASM figure (as would probably be the case with the LA/Caribbean flying), but the others are the reason it is higher than the "mainline only" CASM that the company reports.

Tom Bascom:

"What are the corresponding revenue numbers?"

They are here. This the the BTS report for the second quarter. As someone else said, I was responding to the claim that we would achieve lower unit costs than WN. Unfortunately, BTS does not publish this type of report that includes international operations.

FA Mikey:

"there is no way U can achieve cost lower than SWA"

While "mainline" could possibly come close (assuming WN loses some of the edge provided by hedging going forward due to the hedged price rising), you make a valid statement if one considers the airline as a total system and not just a "mainline" to WN comparison. To me, that is the only accurate comparison. After all, for the one of six or seven passengers that fly "US Airways" but never set foot on a mainline aircraft, the cost of transporting them IS a U cost.

Jim

 

[BoeingBoy]

It was mentioned that the only "fair" comparison would include international operations in any comparison of unit costs. Since I want to be absolutely fair, here are select CASM figures for total operations (domestic, international, and express). Since I had to get the underlying data from quarterly reports (2nd qtr for US, 3rd qtr for the rest) and do the math, I didn't compute numbers for all the airlines listed in my post at the start of this thread. Feel free to do so and let us all know the results.

You'll note that there are two numbers for each airline - Operating and Total CASM. Operating CASM is total operating expense divided by total ASM's. Total CASM is total expenses divided by total ASM's.

US:
Operating CASM 12.07 cents
Total CASM 12.38 cents

AA:
Operating CASM 10.11 cents
Total CASM 10.11 cents

CO:
Operating CASM 10.29 cents
Total CASM 10.27 cents

WN:
Operating CASM 07.61 cents
Total CASM 07.61 cents

In the spirit of "what if", I also calculated our overall CASM assuming a $1 Billion per year drop in expenses (more than the company says it is seeking), or $250 Million per quarter. I again used 2nd quarter total ASM's (partly because any other number would be purely a guess and partly to be conservative - increased ASM's with the same drop in labor expenses would produce a smaller change in CASM)

US:
Operating CASM 10.46 cents
Total CASM 10.77 cents

You'll notice that the concessions sought by the company do not result in CASM lower than either AA or CO, and far from lower than WN.

You may also notice that another 1.4 cent drop in our CASM (from the $700 Million in non-labor savings envisioned in the "new" transformation plan) would still leave our costs higher than WN. And remember that those structural changes will presumably result in more ASM's being produced (the increased A/C utilization), which will result in less savings from labor concessions on a per seat mile basis.

Jim

 

[vc10]

You need to stage length adjust those numbers before you can compare them. All other things being equal, an airline with a shorter average stage length will have higher CASM.

US:
Operating CASM 12.07 cents
Total CASM 12.38 cents

AA:
Operating CASM 10.11 cents
Total CASM 10.11 cents

[...]

[post="194949"][/post]​

 

[BoeingBoy]

You need to stage length adjust those numbers before you can compare them. All other things being equal, an airline with a shorter average stage length will have higher CASM.

[post="194951"][/post]​

You mean just like the company "stage length adjusted" employee CASM in their filings with the court supporting how overpaid we are? Oh, that's right - they didn't, did they.

Actually, WN has a shorter stage length than we do (576 miles for WN in the 3rd quarter vs 805 for US mainline in the 2nd quarter - company didn't report Express or consolidated)

That would either adjust our CASM upwards relative to WN's, or adjust theirs downward relative to ours. Making it even harder to reach their unit costs.

Thanks for pointing out another factor that makes it virtually impossible for us to have lower unit costs than WN.

Jim

 

[whlinder]

I haven't heard any good spin from A320 in a few days so I thought I'd bump this up and give him a chance to spin his wheels some more...

 

[funguy2]

Boeing Boy... Good calculations... Maybe we have some rounding errors, but I am with you. In another thread, I calculated a 10.76cents CASM in 3Q04 if the $38mil/month cost reductions were in place.