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21 US Carriers Turn A Profit.  
User currently offlineBOE773 From , joined Dec 1969, posts, RR:
Posted (7 years 7 months 18 hours ago) and read 2988 times:

Tuesday September 19, 2006

US Bureau of Transportation Statistics reported that a group of 21 US passenger airlines, consisting of the seven largest network, low-cost and Regional carriers based on operating revenue, reported a collective domestic operating profit margin of 7.9% in the second quarter, the largest quarterly margin for the group since 2000. BTS said yesterday that the LCCs reported a domestic operating profit margin for the quarter of 10.6%, up 5.3 points compared to the year-ago quarter. The Regionals reported a 7.9% margin, down 2.8 points, and the network carriers a 7.2% margin, an improvement of 9.4 points.

Source: ATW.

18 replies: All unread, jump to last
 
User currently offlineDeltaJet757 From United States of America, joined Sep 2006, 243 posts, RR: 0
Reply 1, posted (7 years 7 months 18 hours ago) and read 2939 times:

If you haven't already noticed, air travel particularly in the U.S. domestic market has picked up a lot especially this last summer. I'm finding that I need to book way ahead of time to get a good price for a couple of tickets (and good seats).  airplane   airplane   airplane   airplane   airplane 

-DeltaJet757



FLY DELTA JETS
User currently offlineIkramerica From United States of America, joined May 2005, 21413 posts, RR: 60
Reply 2, posted (7 years 7 months 17 hours ago) and read 2932 times:

Travel has picked up and with higher prices. A recipe for profits. And it points out how stupid airlines were before, because people are going to fly anyway, and they were selling flights for LESS than people were willing to pay!!! That's called a stupid business strategy...


Of all the things to worry about... the Wookie has no pants.
User currently offlinePanamair From United States of America, joined Oct 2001, 4792 posts, RR: 25
Reply 3, posted (7 years 7 months 16 hours ago) and read 2860 times:
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More importantly, while demand remained strong, many carriers were very disciplined about capacity, including DL and NW's significant domestic capacity cuts. This allowed the carriers not only to raise fares, but to also sustain those higher fares.

User currently offlineUAL777UK From United Kingdom, joined Nov 2005, 3356 posts, RR: 1
Reply 4, posted (7 years 7 months 14 hours ago) and read 2770 times:

Don't forget that fuel costs have come down as well!

User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 5, posted (7 years 7 months 13 hours ago) and read 2756 times:

Quoting UAL777UK (Reply 4):
Don't forget that fuel costs have come down as well!

I'm not sure that was a decisive factor in the latest round of profits, since fuel has been down only significantly in the last month or so. The airlines have definitely regained some pricing power in the market place. The lower fuel prices should auger well for the next round of financials!



"When all is said and done, more will be said than done".
User currently offlinePanamair From United States of America, joined Oct 2001, 4792 posts, RR: 25
Reply 6, posted (7 years 7 months 13 hours ago) and read 2756 times:
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Quoting UAL777UK (Reply 4):
Don't forget that fuel costs have come down as well!

Actually fuel costs have only come down in the last few weeks. These numbers were reported for Q2 2006 where they were still very much in the $70-$75 per barrel range.

Of course now that fuel costs are down, slowing traffic due to a potentially slowing economy and the new security measures, are going to dampen the positive effects of lower fuel expenses.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 7 months 9 hours ago) and read 2587 times:

Capacity discipline has to occur with both the network carries and LFCs. In the past, no amount of capacity discipline by network carriers has helped because LFCs have added capacity. The difference recently is that LFCs are rationalizing capacity and allowing fares to go up.

Fuel is a factor given that only WN has a real advantage in fuel costs and that is offset by higher than average labor costs.

This may be the last business cycle that we talk about network and LFCs separately because the line between them is already getting very blurred. There were network carriers that reported better profit margins than LFCs and some of the network carriers are now lowering costs to levels approaching single digit percentages above LFCs.

The next down cycle in the industry will show which airlines have winning business plans and which ones do not. It will no longer be true that one segment or another will succeed. There will be failures and losses among all types of airlines.


User currently offlinePanamair From United States of America, joined Oct 2001, 4792 posts, RR: 25
Reply 8, posted (7 years 7 months 8 hours ago) and read 2486 times:
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Here are the operating margins for Q2 2006 for a selected group of US carriers, and even for the top 3 European carriers (for their Apr-Jun 06 quarter):

WN 16.4%
FL 11.4%
US 10.7%
BA 9.2%
NW 9.0%
AA 8.0%
DL 7.9%
B6 7.7%
LH 7.4%
AF-KL Group 7.1%
CO 7.0%
UA 5.0%


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 9, posted (7 years 7 months 8 hours ago) and read 2428 times:

Quoting Ikramerica (Reply 2):
Travel has picked up and with higher prices. A recipe for profits. And it points out how stupid airlines were before, because people are going to fly anyway, and they were selling flights for LESS than people were willing to pay!!! That's called a stupid business strategy...

AA has been charing about 5-10% more for my flights than I usually fly..and even though its not a lot..all those tickets sold = a lot more  dollarsign ....its not a big deal, and if it helps AA make money, then I'm all for it.... checkmark 

to top it off...I'm actually flying more now than I did even last year...which was a record year for me.....

kudos to the carriers....I would like to see oil at the $45-$50 mark...



"Up the Irons!"
User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3786 posts, RR: 30
Reply 10, posted (7 years 7 months 5 hours ago) and read 2285 times:

Quoting Ikramerica (Reply 2):
And it points out how stupid airlines were before, because people are going to fly anyway, and they were selling flights for LESS than people were willing to pay!!!

Not to worry... seems the U.S. legacies have lately begun to show some determination to return to their business as usual of charging less, even far less, than their customers are willing to pay, in the interest of market share and load factors as ends in themselves. Almost as if the legacies have taken on some self-imposed guilt complex over the reasonable, realistic fares which their customers were obviously willing to pay -- because they did (and still do when/where loss-leader fares are not available) -- in record numbers.

But alas, if there is one thing the U.S. legacies have consistently proven a knack for over the years, it is that they never miss an opportunity to miss an opportunity to become profitable on a consistent basis. It's looking more and more like that part of their DNA code hasn't changed at all. What bodes even worse for the legacies is that it looks like the legacies are slowly but steadily reverting to another tenet of their business as usual in their practice of hoping to be able to fleece business travelers while throwing a profusion of loss-leader fares at leisure travelers; which led to their precipitous decline (which began well before 9/11/01). The result will be the same once again, especially when the inevitable tightening of business travel budgets begins to happen.


User currently offlineFATFlyer From United States of America, joined May 2001, 5772 posts, RR: 15
Reply 11, posted (7 years 7 months 5 hours ago) and read 2212 times:

Domestic passenger counts have been basically flat this year, not up. Summer may have been better, we'll see.

In the first six months of 2006, counts were only up about 0.2%, less than a quarter of 1%.

Quote:
U.S. airlines carried 326.7 million scheduled domestic passengers during the first six months of 2006, up from the 325.9 million carried during the same period in 2005 (Table 8).

http://www.dot.gov/affairs/bts4206.htm



"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
User currently offlineMidway2AirTran From United States of America, joined Jul 2003, 864 posts, RR: 2
Reply 12, posted (7 years 7 months 4 hours ago) and read 2179 times:

Quoting UAL777UK (Reply 4):
Don't forget that fuel costs have come down as well!

Many times this is a precursor for the below...After all it is all about supply and demand

Quoting Panamair (Reply 6):
slowing traffic due to a potentially slowing economy and the new security measures, are going to dampen the positive effects of lower fuel expenses.

It's fun to see the profits, but the next down-cycle may be on its way, be ready!



"Life is short, but your delay in ATL is not."
User currently offlinePanamair From United States of America, joined Oct 2001, 4792 posts, RR: 25
Reply 13, posted (7 years 7 months 1 hour ago) and read 2007 times:
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Here's the actual report from the DOT/BTS regarding the Q2 06 numbers; it's only for Domestic operations:

http://www.bts.gov/press_releases/2006/bts043_06/html/bts043_06.html

Quite a few interesting (and surprising) points:

- CO actually posted an operating LOSS for domestic during Q2: -$17million. This really surprised me - in fact, CO has been posting losses domestically for the past year. Obviously International is what's helping CO post overall Operating Profits. CO, together with ATA and Spirit, were the only ones to have posted domestic losses in Q2

- Both NW and DL posted the highest operating margins of legacy carriers for domestic during Q2 though they both LOST money (the only two of the legacy network carriers) internationally. NW lost $19 million while DL lost $24 million internationally. In DL's case this was primarily due to the pilot strike threat-bookaway effect during April and May for Europe-originating traffic (as evidenced by DL's overall operating profits of $84m, $78m in April and May respectively, before swinging back up to $207m in June). And before anyone jumps in now to say that DL's international expansion is not working, remember that DL's expanded TATL ops were fully in place only in June.

- Of the regionals, ASA had the highest profit margin while Comair had the lowest. OH also had the highest unit cost of all the regionals, coming in at 16.4 cents (next closest was AAEagle at 15.3). Amongst all airlines, OH's unit costs were only topped by legacies US and CO, each coming in at 17.0 cents.

- Most dramatic improvements in operating margins from Q1 to Q2 for network carriers were for Alaska (from -27.8% to +5.2%) and Delta (from -9.4% to +11.1%)


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 14, posted (7 years 7 months 1 hour ago) and read 1971 times:

remember that this is based on DOT data which does not necessarily represent the way finances are reported from an accounting standpoint.

It does validate that there is hardly unity in the finances of any group of airlines.


User currently offlineSBNair3022 From United States of America, joined Jul 2006, 110 posts, RR: 0
Reply 15, posted (7 years 6 months 4 weeks 7 hours ago) and read 1729 times:

why isnt Allegaint (G4) on here?? I thought they were makin a profit!


SBNair!!
User currently offlineB777a340fan From United States of America, joined Oct 2005, 753 posts, RR: 0
Reply 16, posted (7 years 6 months 4 weeks 7 hours ago) and read 1697 times:

Quoting DeltaJet757 (Reply 1):
If you haven't already noticed, air travel particularly in the U.S. domestic market has picked up a lot especially this last summer. I'm finding that I need to book way ahead of time to get a good price for a couple of tickets (and good seats).

Like FATFlyer said up there, passenger counts have remained pretty much steady. I think the cancellation of flights, introduction of new flights to new destinations (domestic and int'l) have helped mark profits.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 17, posted (7 years 6 months 4 weeks 2 hours ago) and read 1568 times:

not sure where you are getting info about int'l operations from but it isn't in the press release which entirely deals w/ domestic operations.

User currently offlineFATFlyer From United States of America, joined May 2001, 5772 posts, RR: 15
Reply 18, posted (7 years 6 months 4 weeks 1 hour ago) and read 1519 times:

Quoting SBNair3022 (Reply 15):
why isnt Allegaint (G4) on here?? I thought they were makin a profit!

Allegiant is making a profit, this was selected airline info from the BTS. From the release:
The 21-carrier group consists of the seven largest network, low-cost and regional carriers based on operating revenue.



"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
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