RJ Economics

[Rob]

I posted the below numbers on the CAL Yahoo board and got no good answer yet - that board isn't as good as it used to be, but this one still is. So, would you folks mind taking a whack at my numbers? Sorry that it's about CO and not US, but the general conclusion, that RJs may be on the verge of profitability, applies to all. The post:

XJT said in their last 10Q that ex-fuel their CASM was 11.42 cents and of that their fuel cost was 1.77 cents for the period. Since CAL subsidizes XJT's fuel cost over 77 cents a gallon, the true cost of XJT's fuel was 4.07 cents, increasing CASM by 2.3 cents to 13.72 cents. CAL's other subsidies to XJT are fairly minor, but let's say they are worth .5 cents, making XJT's true CASM something like 14.22 cents.

In CLE, as an example, the average yield is 16.9 cents, as of Q1 '05. Applying this to XJT's l/f of 76.4% produces a RASM of about 12.9 cents.

Thus CAL is losing about 1.32 cents per pax/mile on CLE RJ ops.

Note: the 11.42 cent CASM does include XJT's fuel cost, but not the CAL subsidy - it is not completely ex-fuel.
Right? Wrong? I know I have failed to adjust CASM for length of haul and for the fact that CLE RJ routes' yield is higher than the average yield; but is it fair to say that with recent yield improvements and fuel reductions, CLE RJs could be close to break even?

 

[ringmaruf]

The last few quarters, US has actually been breaking down its Express revenues and expenses. They've actually been running around break-even, give or take a few million; it was a small profit one quarter I recall. Of course, the 1st quarter is the slowest one, so we'll see how things are then; I'd also expect this quarter to be poor, as they have more 50-seat planes than they want, since the Air Wisconsin birds are coming quicker than the Mesa and Trans States birds are leaving. I'd also note that ExpressJet is a relatively high-cost RJ provider from what I've heard, so I'd expect the US birds to have lower costs, especially after negotiating the rates down in bankruptcy; also, US only has 50-seat and larger RJs, none of the higher-CASM 37 or 44 seat birds. The US Express numbers include all of the RJs, at PSA and the affiliates, the EMB-170s, and the props at Piedmont, but not the affiliate props. So the props really are only a small part of that, probably not changing the profit a lot. I'm sure you can find the numbers in their earnings reports on the website, and if you can't, I can look for the numbers tomorrow, but I've got to get to bed.

 

[Rob]

... I'm sure you can find the numbers in their earnings reports on the website ...

Yes, I can find the official reports but those numbers include non-operational components that at this time don't interested me. I was looking for operating profit only, trying to see just how big a burden the 50 seaters really are.

 

[john john]

Yes, I can find the official reports but those numbers include non-operational components that at this time don't interested me. I was looking for operating profit only, trying to see just how big a burden the 50 seaters really are.

It is top secret management does not want labor to know just had inefficient and unreliable the RJ’s are. They are here and mass numbers because of Glass and the gang for scope bussing Like the outsource call center complaint and reliable numbers very hard information to get management to give the unions. Some times I wonder if they really have the info or if they just don’t care or they are playing dumb like a fox. FOD

 

[autofixer]

They know ... now that labor is busted and scope is long gone, there is no follow up. I can see them in the board room now, looking at each other and asking, "That was easy, what now?"