THIRD QTR. PROFIT

[MetalMover]

http://finance.yahoo.com/news/american-airlines-group-reports-record-120000586.html

 

[JFK Fleet Service]

Last one out be sure to shut the lights.

 

[WorldTraveler]

It's a little surprising that no one has been able to interpret any of AA's results but here are a few highlights... others will follow.

AA's performance reflected a strong domestic revenue environment and improved performance on the Pacific which was more than offset by weaker RASM on the Atlantic and much weaker RASM in Latin America (down a hefty 11.7%)

AA's cost control was better than predicted.

AA performed middle of the pack among the 3 legacy airlines.

based on total operating revenue as well as passenger revenue, AA is the 2nd largest US airline behind DL but ahead of UA.

 

[jcw]

I hope everyone is sitting down as some FA turned financial analyst is going to blow a gasket today. Here is a quick summary

AA:

Rev 11.139
Operating income 1.260


DL

Rev 11.178
Operating income 835


Guess who had a better quarter it was AA


It's going to be tough to rationalize this away

Some other interesting facts:

Aircraft fuel and related taxes down 1.3% at AA and up 29% at DL - great strategic management on fuel

Salaries up 4.8% at AA and up 5% at DL - sorry about that AA wins on this one

Total operating expenses up 3.5% at AA and up 16% at DL another winner for AA

While DL had better revenue growth it was destructive revenue growth because expenses and operating revenue are way down - hail to DL keep up the strategies you will make WT proud

 

[WeAAsles]

Since its merger with U.S. Airways, American’s policy is to leave its fuel expense unhedged. American’s aggressive plans to replace older planes with larger-gauge and newer fuel-efficient planes as part of its fleet renewal program will also add to fuel cost savings through lower fuel consumption. Based on management’s forecast of fuel consumption at 4.3 billion gallons in 2014, even a 1 cent-per-gallon decline in fuel price will result in a $43 million decrease in annual expense.

http://marketrealist.com/2014/10/consider-investing-american-airlines/

 

[autofixer]

Since its merger with U.S. Airways, American’s policy is to leave its fuel expense unhedged. American’s aggressive plans to replace older planes with larger-gauge and newer fuel-efficient planes as part of its fleet renewal program will also add to fuel cost savings through lower fuel consumption. Based on management’s forecast of fuel consumption at 4.3 billion gallons in 2014, even a 1 cent-per-gallon decline in fuel price will result in a $43 million decrease in annual expense.

http://marketrealist.com/2014/10/consider-investing-american-airlines/

Parker doesn't  fuel hedge.  He believes fuel costs average out in the end, without the hedging costs & RISKS.  So far he' been right.

 

[WorldTraveler]

I hope everyone is sitting down as some FA turned financial analyst is going to blow a gasket today. Here is a quick summary

AA:

Rev 11.139
Operating income 1.260


DL

Rev 11.178
Operating income 835


Guess who had a better quarter it was AA


It's going to be tough to rationalize this away

Some other interesting facts:

Aircraft fuel and related taxes down 1.3% at AA and up 29% at DL - great strategic management on fuel

Salaries up 4.8% at AA and up 5% at DL - sorry about that AA wins on this one

Total operating expenses up 3.5% at AA and up 16% at DL another winner for AA

While DL had better revenue growth it was destructive revenue growth because expenses and operating revenue are way down - hail to DL keep up the strategies you will make WT proud

DL took larger amounts of special charges - related to the decision to retire the 744s and because of hedge losses.

nonetheless, DL still had a lower fuel cost per gallon and also became the US' largest airline.

AA spent a couple hundred million on merger integration - perhaps 1/8th of what analysts expect it will cost to finish the merger.

DL's operating margin was higher than AA's and any other of the big 4. DL is fundamentally running a more profitable business.

And how does it make you feel that AA's RASM in Latin America fell an astonishing 11.7%; I'm not sure I have seen a RASM drop of that magnitude for any US airline in a very long time.

Latin America right now is a lead weight for AA driven likely by a few severely performing markets. Be sure and listen to let me know what rationalizations AA mgmt. comes up for that enormous drop.

oh and DL employees gained $384 million in profit sharing. plz let me know the figure for AA employees. as an employee, I would hardly call coming in behind DL in salary and benefit increases - which do not include profit sharing - a win.

 

[jcw]

It's a little surprising that no one has been able to interpret any of AA's results but here are a few highlights... others will follow.AA's performance reflected a strong domestic revenue environment and improved performance on the Pacific which was more than offset by weaker RASM on the Atlantic and much weaker RASM in Latin America (down a hefty 11.7%)AA's cost control was better than predicted.AA performed middle of the pack among the 3 legacy airlines.based on total operating revenue as well as passenger revenue, AA is the 2nd largest US airline behind DL but ahead of UA.

Also assuming your first sentence is a personal attack - can't help yourself - interesting double standard

 

[WorldTraveler]

no, it is not a personal attack. No one bothered to post anything regarding the numbers until I did.

your assumption is wrong.

 

[dfw gen]

i am just so happy to be part of such a successful quarter. im sure my contribution of 17% of my pay, 50% of my holidays, double time, holiday pay and half day of sick time is finally being used productively!
 
Thank You TWU!

 

[jcw]

no, it is not a personal attack. No one bothered to post anything regarding the numbers until I did.your assumption is wrong.

Once again it was

However your analysis continues to be way off and now you want to net out special items if you do that AA still comes up on top - remeber income is the important number not revenue

You might not realize there is a currency crisis in LA - and I bet you forget when SARS happened and DL did poorly in Asia

It's funny how you can connect the dots

Bless your heart - you might want to retake the arm chair financial analysis - spin class

 

[WorldTraveler]

It's funny how you can connect the dots

actually I can connect the dots


thank you.

AA outperformed solely on the bottom line number. On every metric that speaks to how an airline is run, DL outperformed AA.

the fact that AA is in Latin America just as major currency crises are arising is no more of an excuse for AA's underperformance in Latin America than it is that DL has had to take a charge for its 744 retirements because Japan's currency devaluation significantly changed the economics of the NRT hub.

AA no longer has its enormous Latin America hub to generate cash to support the rest of the airline.

it is no more DL's fault that AA is facing a currency crisis in Latin America than AA should take responsibility for DL's need to restructure its Pacific network to reduce NRT connections.

 

[jcw]

You don't AA beat your little airline and you can't admit it

Asia is struggling its to bad this is all going by you

Have you purchased an old DL airframe to live in

 

[FrugalFlyerv2.0]

AA's performance reflected a strong domestic revenue environment and improved performance on the Pacific which was more than offset by weaker RASM on the Atlantic and much weaker RASM in Latin America (down a hefty 11.7%)
 

 
It's too bad AA doesn't listen to your expert advice/analysis and just abandon all of its T-PAC routes.

 

[WorldTraveler]

I'm listening to UA's earnings call right now and they are noting the increase in competitive capacity in China but still note that the Pacific is solidly profitable.

too bad AA can't say the same thing.

and no AA doesn't have to abandon Pacific flying - just grow it at a pace that allows AA to be profitable.

AA's RASM on the Pacific did improve although it is still in an absolute figure the lowest in the US industry.


AA doesn't have the luxury of relying on Latin America to subsidize losses elsewhere on the rest of the system.