Everyone talks about the $1.1 billion in concessions, but wouldn't this be offset by the cost of the outsourcing, so is $1.1 billion a true number to use???
U Reports 4th Qtr Results
- Thread starter BoeingBoy
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SVQLBA said:
My notes indicated DAL Mainline CASM was 10.40cents, and including Connection was 11.10cents. I think those included the Special Items. Excluding Special items, you are right 9.75cents. Including or excluding items is always a tough call for me, because sometimes you need to and some times you don't, to keep it apples to apples. And most of the time, the swing is not as big as it was for Delta this quarter...
OP
- Nov 9, 2003
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A couple of things to consider....
No one will ever know if the $1.1 billion in concessions will be achieved. I'm thinking specifically about the DB retirement plan savings. How much would the company have actually had to contribute in the outyears vs the savings claimed by termination. The economy, stock market performance, and specifically the performance of whatever investments the funds would have been invested in would determine that.
Comparing 4Q04 vs 4Q03, employee expenses were down almost 22%. However fuel was up 57% - labor costs down $144 million partially offset by fuel increasing $117 million.
Selling the fuel hedges in the 4th quarter netted $47 million - something that can't be repeated in 1Q05. Factor this into the fuel expense, and the extra cost of fuel would have more than offset the labor savings in 4Q.
I expect 1Q05 CASM to about equal 4Q04 CASM because of fuel - unless there is a dramatic drop quickly (and with spot fuel prices about $1.46 per gallon it doesn't seem likely).
Jim
ps - I didn't see the 4Q mainline CASM including fuel in the press release - did you calculate it or is it in something I haven't seen.
No one will ever know if the $1.1 billion in concessions will be achieved. I'm thinking specifically about the DB retirement plan savings. How much would the company have actually had to contribute in the outyears vs the savings claimed by termination. The economy, stock market performance, and specifically the performance of whatever investments the funds would have been invested in would determine that.
Comparing 4Q04 vs 4Q03, employee expenses were down almost 22%. However fuel was up 57% - labor costs down $144 million partially offset by fuel increasing $117 million.
Selling the fuel hedges in the 4th quarter netted $47 million - something that can't be repeated in 1Q05. Factor this into the fuel expense, and the extra cost of fuel would have more than offset the labor savings in 4Q.
I expect 1Q05 CASM to about equal 4Q04 CASM because of fuel - unless there is a dramatic drop quickly (and with spot fuel prices about $1.46 per gallon it doesn't seem likely).
Jim
ps - I didn't see the 4Q mainline CASM including fuel in the press release - did you calculate it or is it in something I haven't seen.
Also keep in mind that most of the "benefits" of the latest round of concessions won't really kick-in until this quarter and next.
What stands out to me isn't the CASM, but the RASM (which many people seem to ignore).
US's RASM seems to have fallen much faster than the rest of the industry. Most of the airlines reported RASM declines between 3-6%. US saw RASM fall almost 11%.
Here's a selected few (PRASM change in Q4):
CO -1.0%
NW -3.0%
AA -3.1%
WN -3.9%
DL -5.6%
FL -5.6%
B6 -7.3%
US's -10.9%
Maybe it's the bankruptcy effect, maybe its the LCC's, maybe it's the bad publicity, maybe it's all of them...but whatever it is, US can't continue to have RASM falling that fast. It will eat up any cost gains that US has achieved putting US right back where it started.
US's RASM seems to have fallen much faster than the rest of the industry. Most of the airlines reported RASM declines between 3-6%. US saw RASM fall almost 11%.
Here's a selected few (PRASM change in Q4):
CO -1.0%
NW -3.0%
AA -3.1%
WN -3.9%
DL -5.6%
FL -5.6%
B6 -7.3%
US's -10.9%
Maybe it's the bankruptcy effect, maybe its the LCC's, maybe it's the bad publicity, maybe it's all of them...but whatever it is, US can't continue to have RASM falling that fast. It will eat up any cost gains that US has achieved putting US right back where it started.
BoeingBoy said:
Check the AIRPG2 tab of the Excel spreadsheet that you can download from the press release.
funguy2 said:
Checking the release
Delta Q4 results
15.46 was the concolidated CASM (mainline + regionals etc)
11.10 was consolidated excluing unusual items
10.15 was the consolidated, fuel-neutralized CASM
Under mainline only, it then shows the 9.75 as operating CASM -- interestingly, the mainline only CASM excluding unusuals was 10.40.
Overall, a confusing set of numbers ...
DLFlyer31 said:
Agreed-- getting costs in line is just one part of the bigger problem. RASM figures are partly driven by stage length just as CASM figures are (shorter flights tend to have higher RASM than longer flights), but US's decreases appears to be more than just Southwest. Indy has been killing yields in the DC area, which can't have been good for US. Still, -10.9% was not good,
That's optimistic. First of all, the December Q expenses include the Sec 1113(e) savings. Secondly, some labor savings will be offset by the expense of outsourcing. That fired mechanic's salary is replaced by additional maintenance expense.
funguy2 said:
Geez... There I was trying to be optimistic today, and the reality still hits you in the face...
DL Flyer... Your RASM numbers bring up a good point. I guess part two is the DAL effect. If US Airways is already down 10%, can DAL decrease their RASM 10% more, or will there be a bottoming effect (i.e. it can only go down to a certain point before bottoming out...)
Interesting that the bottom 4 on your list all have high concentrations of East Coast Operations. The exception being CO. Of course, CO is an exception in many ways (East Coast concentration, but enviable Transatlantic gateway at EWR, Trans Pac and Latin America probably help too, more so than for the "bottom 4").
DL Flyer... Your RASM numbers bring up a good point. I guess part two is the DAL effect. If US Airways is already down 10%, can DAL decrease their RASM 10% more, or will there be a bottoming effect (i.e. it can only go down to a certain point before bottoming out...)
Interesting that the bottom 4 on your list all have high concentrations of East Coast Operations. The exception being CO. Of course, CO is an exception in many ways (East Coast concentration, but enviable Transatlantic gateway at EWR, Trans Pac and Latin America probably help too, more so than for the "bottom 4").
OP
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DLFlyer31 said:
I posted a link to this in another thread, but it was moved to "General Aviation".....
Year over year (3Q04 vs 3Q03) % change in BTS's Air Travel Price Index:
Philadelphia down 15.8%
Boston down 11.6%
Charlotte down 11.1%
Washington down 8%
New York down 2.9%
Pittsburgh down 2%
ATPI for top 85 markets - 3Q04
Jim
UAL's PRASM for Q4 was down only 0.2% from Q42003. Best performance of any major. Of course, since UAL's RASM has been depressed well below that of other legacy airlines for quite some time now, it isn't too surprising that it didn't fall as much. It's still lower than about any other legacy. B)
genejockey
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USFlyer said:
Remember the court mandated 21% pay cut went into effect on Friday October 15th, 2004. There certainly should have been an obvious financial benefit in the 4Q.
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