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DOT 2Q06 Results Are In: Domestic Is Where It's At  
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Posted (7 years 11 months 5 days 20 hours ago) and read 3555 times:

All US airlines report data to the DOT on a quarterly basis. There are four regions reported: domestic, Atlantic, Latin, and Pacific. Revenues and expenses per available seat mile are reported which yields a profit or loss per ASM by airline for each region.

Here are the results for the network carriers for 2Q06. I’ll profit a ranking by region in descending order with the profit or loss by ASM for the highest and lowest carriers as well as any losses and then a commentary for each airline.

Domestic:
NW (2.46), DL, US, UA, AA, CO (-0.13)

Atlantic
US (5.74)***, CO, AA, NW, UA, DL (-0.10)
*** number looks suspect… US’s yield is 25% higher than any other carrier’s and Atlantic costs for US are the highest of any carrier’s – completely backwards of last year.

Latin
CO (2.84), US, AA, UA, (-0.39) DL (-.66)

Pacific
DL (1.75), CO, UA,, AA (-0.46), NW (-1,31)

Total system
US (2.31), NW, DL CO, AA, UA (0.73)

Commentary by carrier:

AA – London is AA’s bread and butter. AA’s transatlantic Profit per ASM is 3X larger than on its domestic system. Latin is a strong contributor but CO is more profitable to Latin America. AA’s recent cutbacks to Asia are obvious since its Pacific operation is the only money losing region for AA.

CO- CO’s Atlantic and Latin systems are solid performers with over 2.5 cents of profit per ASM in those regions. The Pacific profit is relatively small at .62 but no one reported strong Asian profits; CO’s Asian profits were about 25% of what they were last year – indications that CO’s growth is coming at a cost. CO lost money on its domestic system (the only carrier that did), just as it did one year ago, although this year’s loss is much smaller. This shows why CO is so opposed to Virgin America. CO’s domestic problem is costs.

DLDL’s domestic system drove its profits. DL’s aggressive growth to Europe and Latin America sent its costs up much faster than its yields on a year over year basis. DL’s Atlantic was profitable last year while its domestic system lost money – the opposite of what happened this year. DL’s Atlantic losses were 0.10 cents per ASM, the smallest loss of any carrier in any region. DL’s yields did grow but it is obvious that there are high start up costs that eroded DL’s profitability. DL will have to be more careful about managing costs as it continues to grow internationally but indications are that the revenue is materializing on its new routes. DL had the highest operating margin on the Pacific where no carrier did terribly well. It does indicate why DL feels comfortable about expanding in Asia, esp. from Atlanta.

NWNW’s domestic system was the most profitable of any carrier thanks to its capacity reduction and aggressive cost cutting. The Atlantic was solidly profitable. NW’s losses to Asia were only about 25% less this year so the Asian system is still a drag on NW.

UAUA’s domestic system came in ahead of AA’s and CO’s thanks to strong revenues. UA is getting the revenue premiums necessary to match its high costs. UA continues to lose money to Latin America, although this year’s losses are about half of last year’s. The Atlantic is profitable but is better only than DL’s. UA’s Pacific generated a small (0.18) profit.

US – US was the only carrier that was profitable in every reporting region. Data for US’s transatlantic region looks suspect although they still could have been profitable. US’ is shrinking itself to profitability on its domestic and Latin systems but is apparently finding strong growth prospects to Europe.

Commentary by region:

It is apparent that just about every carrier that shrunk capacity was profitable in that region while those that expanded lost money. Capacity isn’t included in this DOT data but it does indicate that each carrier is restructuring based on where it expects its profits to come from and in some cases is willing to take a hit now for a stronger long-term route system.

Domestic – clearly this is what drives profitability. Every US carrier is still predominantly domestic. The strongest results here translated into the strongest overall profits. DL lost money on most of its international system due to aggressive growth but reported industry average profits because of strong domestic performance – driven by cost cuts and revenue growth. On the other hand, CO could not use its strong int’l performance to offset its domestic losses, landing it in next to last place among domestic carriers in total profits. CO’s domestic growth to counter other airlines will likely continue to suppress its domestic results.

Atlantic – CO’s Atlantic profits remained strong. AA and NW with strong, concentrated European route systems did well. UA’s transatlantic system is profitable although shrinking.

Latin – CO shines here and makes money about 3 times faster than AA. DL is obviously growing to capture share but it is costly. DL’s Latin system last year was breakeven. Much of the growth is coming to resort destinations which do not do well for most of the 2nd quarter so timing might be an issue. US has found the right size in Latin America while UA’s shrinking Latin system still loses money.

Pacific – It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia. Results seem to say otherwise. AA’s aggressive growth by AA and CO hurt their results. NW’s lack of investment shows in its continued poor Pacific results. UA’s profits are small but constant. UA’s costs are high for a region with flights that long.

23 replies: All unread, jump to last
 
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 1, posted (7 years 11 months 5 days 20 hours ago) and read 3516 times:

Can you please post a link to the original report?

User currently offlinePanamair From United States of America, joined Oct 2001, 4896 posts, RR: 25
Reply 2, posted (7 years 11 months 5 days 19 hours ago) and read 3489 times:
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Quoting WorldTraveler (Thread starter):
DL’s aggressive growth to Europe and Latin America sent its costs up much faster than its yields on a year over year basis. DL’s Atlantic was profitable last year while its domestic system lost money – the opposite of what happened this year. DL’s Atlantic losses were 0.10 cents per ASM, the smallest loss of any carrier in any region

Also, don't forget that DL's Q2 Atlantic numbers were negatively influenced by the pilot strike threat in April and part of May; Whitehurst had mentioned that the biggest hit they took from the labor issue was in Europe-originating traffic in April and part of May. This is also evident when looking at DL's overall operating profits picture for April, May, and June - $84m, $78m, and $207m respectively. The rather large difference between April/May and June not only reflect the fact that June is usually one of the strongest months, but also reflects the Atlantic bookaway effect.

I might even go out on a limb and say that Atlantic was most probably profitable in June. Overall, for Q2, DL's domestic operating profit was US$393m while international lost US$24m.


User currently offlineSeeTheWorld From United States of America, joined Dec 2005, 1325 posts, RR: 4
Reply 3, posted (7 years 11 months 5 days 19 hours ago) and read 3489 times:

Quoting WorldTraveler (Thread starter):
Pacific – It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia. Results seem to say otherwise. AA’s aggressive growth by AA and CO hurt their results. NW’s lack of investment shows in its continued poor Pacific results. UA’s profits are small but constant. UA’s costs are high for a region with flights that long.

Thanks for the good review. One thing, though, to suggest that DL's one Pacific flight to NRT suggests that ATL is a good gateway to Asia or that DL would somehow be more profitable to Asia than the other carriers is a real stretch. Compare everyone else's NRT flights against DL's and I'm sure you will get equally strong results.


User currently offlineAirbazar From United States of America, joined Sep 2003, 8307 posts, RR: 10
Reply 4, posted (7 years 11 months 5 days 19 hours ago) and read 3459 times:

How can you say that "Domestic is where it's at" when the only airlines that did strongly domestically are the one that are in BK (mainly DL and NW)? AA,US,CO, NOT in BK, all performed better somewhere else.

The way I read the report, the Atlantic is where it really is!


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6606 posts, RR: 24
Reply 5, posted (7 years 11 months 5 days 19 hours ago) and read 3415 times:

Quoting WorldTraveler (Thread starter):
DL’s domestic system drove its profits.

Funny, I've been saying this for a while, but all the DL cheerleaders have jumped all over me...saying it was DL's international growth that was driving profits.

Quoting WorldTraveler (Thread starter):
It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia.

Basing the performance of an entire region on one flight is pretty ridiculous. You try to portray yourself as a great analyst, but comments like this betray you.


User currently offlineLemurs From United States of America, joined Mar 2005, 1439 posts, RR: 4
Reply 6, posted (7 years 11 months 5 days 18 hours ago) and read 3391 times:

As others have mentioned...show us ATL-NRT versus ANYCITY-NRT, and we'll see a different picture. It would make the better argument of: "NRT is an excellent North American gateway" rather than "ATL is a good Asian gateway."

One thing missing from the numbers that would be interesting is capacity growth and shrinkage. As you mentioned, CO and AA are bullish on growing capacity, so their ASM numbers would be interesting compared to DL and NW, which by all accounts have shrunk their domestic capacity (to very good effect for their bottom line).



There are 10 kinds of people in the world; those who understand binary, and those that don't.
User currently offlineYOW From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 11 months 5 days 18 hours ago) and read 3354 times:

Quoting WorldTraveler (Thread starter):
US – US was the only carrier that was profitable in every reporting region. Data for US’s transatlantic region looks suspect although they still could have been profitable. US’ is shrinking itself to profitability on its domestic and Latin systems but is apparently finding strong growth prospects to Europe.

Keep in mind US is the smallest of the transatlantic players amongst the U.S. majors, so changes to their Atlantic operations will impact their percent changes more so than others.


User currently offlineLaxintl From United States of America, joined May 2000, 25132 posts, RR: 46
Reply 8, posted (7 years 11 months 5 days 18 hours ago) and read 3333 times:

For those that would like to see the big picture here is the regional performance. You'll have to excuse the format due to a.net limitations.

Numbers are listed are Operating Revenue per ASM(cents), Operating Expense per ASM, Profit or loss per ASM, and Yield

American:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:13.25/12.52/+0.73/12.63
Atlantic:14.25/11.97/+2.28/12.87
Latin:13.50/12.54/+0.96/14.18
Pacific:11.63/12.09/-0.46/10.50

Continental:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:16.91/17.00/-0.13/13.04
Atlantic:11.53/8.88/+2.65/11.88
Latin:12.61/9.77/+2.84/12.72
Pacific:9.76/9.14/+0.62/10.04

Delta:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:16.83/14.97/+1.87/13.13
Atlantic:10.39/10.50/-0.10/10.98
Latin:9.60/10.26/-0.66/11.55
Pacific:13.37/11.63/+1.75/10.70

Northwest:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:17.89/15.44/+2.46/14.45
Atlantic:10.80/8.97/+1.83/10.85
Pacific:9.60/10.26/-0.66/11.55

United:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:15.74/14.83/+0.91/12.56
Atlantic:12.68/11.57/+1.11/12.11
Latin:10.76/11.15/-0.39/10.74
Pacific:11.09/10.91/+0.18/10.70

US Airways:
Operating Rev ASM/Exp ASM/P&L/Yield
Domestic:18.50/16.96/+1.54/14.05
Atlantic:19.01/13.27/+5.74/14.44
Latin:16.30/14.93/+1.38/13.65

I'd caution everyone to remember these numbers are merely a 3 month snap shot of the carriers regional performance and not fully indicative of how they might and actualy do perform on an annual basis neccesarily.

Interesting anyhow.



From the desert to the sea, to all of Southern California
User currently offlineJetlanta From United States of America, joined Jul 2001, 3262 posts, RR: 35
Reply 9, posted (7 years 11 months 5 days 18 hours ago) and read 3324 times:

One more thing, something that I will keep throwing out there until someone listens.....

Delta transatlantic RASM was significantly effected this year, not only be start-ups, but by the fact that there are 8 767-400s' flying around with no business class to sell. In a domestic configuration, this is a high capacity aircraft and DL is only selling it as coach. Don't underestimate this impact.


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 10, posted (7 years 11 months 5 days 17 hours ago) and read 3292 times:

One other factor that may be significant that nobody has mentioned is that Easter in 2006 was in April, whereas in 2005 it was in late March and therefore in the first quarter.

Now if the US is similar in any way to Europe regarding the easter period, it usually means a significant traffic spike.

So if easter is in march one year and april the next, you would expect to see a drop or lower than normal growth in the march of that following year, but a significant increase in the april. And with your quarterly results you will expect to see the same thing happen.

Now of course the easter effect won't be so significant over a three month quarter rather than a single month, but it still needs to be taken into acount. I'm not saying dismiss the 2nd quarter results, but merely drop the figures slightly to account for this as the results may be encouraging, but the growth shown there is a little misleading - more relevent are the 1st half results rather than the 2nd quarter for clearer results. If they say the same thing then that really is encouraging.



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User currently offlineA330323X From United States of America, joined Oct 2003, 3039 posts, RR: 44
Reply 11, posted (7 years 11 months 5 days 17 hours ago) and read 3273 times:

Quoting WorldTraveler (Thread starter):
Data for US’s transatlantic region looks suspect although they still could have been profitable.

"Still could have been profitable"?

Seeing as how US was profitable on *every single one* of its transatlantic flights last year (including the first-year routes), I think it's a fairly safe bet to say that US was profitable over the Atlantic as a whole (unlike DL).



I'm the expert on here on two things, neither of which I care about much anymore.
User currently offlineLAXdude1023 From India, joined Sep 2006, 7562 posts, RR: 25
Reply 12, posted (7 years 11 months 5 days 16 hours ago) and read 3214 times:

Quoting WorldTraveler (Thread starter):
Pacific – It was not strong for anyone except DL who has just one flight – and that is from ATL which everyone here seems to think is a no-good gateway to Asia. Results seem to say otherwise. AA’s aggressive growth by AA and CO hurt their results. NW’s lack of investment shows in its continued poor Pacific results. UA’s profits are small but constant. UA’s costs are high for a region with flights that long.

Do you have a link for an offical report that reflects this?

Quoting SeeTheWorld (Reply 3):
One thing, though, to suggest that DL's one Pacific flight to NRT suggests that ATL is a good gateway to Asia or that DL would somehow be more profitable to Asia than the other carriers is a real stretch. Compare everyone else's NRT flights against DL's and I'm sure you will get equally strong results.

Totally. I dont doubt that ATL-NRT does well as well as I dont doubt that ATL can pull of ONE more Asian route (any more than that is pie in the sky at this point). I agree with SeeTheWorld's point of view. DL only has NRT, if you look at (for example) UA's or AA's NRT flights, then this can be a fair comparrison. It is biased and an unfair comparrison to compare one DL NRT flight to all of Asia for the other carriers.



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User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 13, posted (7 years 11 months 5 days 16 hours ago) and read 3199 times:

Quoting A330323X (Reply 11):
"Still could have been profitable"?

Ok… you explain why US now has the highest costs on the Atlantic after having the lowest costs last year. And the fact that US’ transatlantic yields are 25% higher than everyone else’s raises questions.

I’m sure US was profitable but they are obviously shifting revenues and costs around as part of the merger and when you see numbers like the 2 above, there have to be questions asked.

Quoting SeeTheWorld (Reply 3):
One thing, though, to suggest that DL's one Pacific flight to NRT suggests that ATL is a good gateway to Asia or that DL would somehow be more profitable to Asia than the other carriers is a real stretch.



Quoting YOW (Reply 7):
Keep in mind US is the smallest of the transatlantic players amongst the U.S. majors, so changes to their Atlantic operations will impact their percent changes more so than others.

Being a niche player in any region has the advantage of picking out the best routes. NRT probably is a good market but UA and NW’s results are skewed by connecting passengers at NRT which divide revenues but multiple costs.

Also, AA’s Pacific route system is largely driven by Tokyo yet AA lost money over the Pacific… India is reported as transatlantic. If SJCNRT and DFWKIX were doing that badly, then AA should have cancelled them a long time ago. If ORDPVG isn’t working, then we have to wonder why AA gets a chance at DFWPEK. No matter how you slice it, NRT is the largest part of AA’s Pacific operation and just about everything else would have to be stinking very bad for AA to be unable to make Asia work or….

DL really does have a plum route in ATLNRT. Time will tell if they can replicate it with other routes to Asia but I know it will shake a lot of people to the core if DL expands Asia from ATL and yet continues to report industry leading financial performance to Asia from an ATL-based Asian operation.

Quoting Airbazar (Reply 4):
AA,US,CO, NOT in BK, all performed better somewhere else.

Reread the report… US did well in all areas and is not in BK. AA was not the best performing airline in any region. CO’s domestic operating loss is precisely why they reported pretty meager overall reports compared to what they’ve done. CO is driven by int’l and it’s Pacific operation didn’t deliver as it has in the past while domestic continued to be a drag.

Quoting Lemurs (Reply 6):
One thing missing from the numbers that would be interesting is capacity growth and shrinkage.

I’ll work on it.

Quoting Jetlanta (Reply 9):
Delta transatlantic RASM was significantly effected this year, not only be start-ups, but by the fact that there are 8 767-400s' flying around with no business class to sell. In a domestic configuration, this is a high capacity aircraft and DL is only selling it as coach. Don't underestimate this impact.

Very true. The all coach 764s were all about generating lots of revenue quickly. Given that fares are high to Europe in the summer and demand was strong, it makes sense. An all coach 764 does depress costs but it should also be a lot more efficient than airplanes that have premium cabins which require spreading the costs over fewer passengers. There is no doubt that the all coach 764s depress yield but I suspect they bring costs down even faster or DL wouldn’t be doing it… and they say they will do it again next summer.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 14, posted (7 years 11 months 5 days 16 hours ago) and read 3169 times:

Here are rough year to date capacity and traffic numbers.


Carrier Dom Chg Atlntc Chg Latin Chg Pacific Chg Mainline Sys Chg

American
RPMs 1% 5% 3% 23% 3%
ASMs -2% 7% -2% 25% 0%

Continental
RPMs 10% 18% 19% 13% 13%
ASMs 7% 20% 14% 11% 11%

Delta
RPMs -14% 18% 31% 5% -5%
ASMs -16% 20% 28% 1% -6%

Northwest
RPMs -5% -6% -4% -5%
ASMs -10% -8% -5% -8%

United
RPMs 6% -1% 16% 3% 5%
ASMs 5% -2% 13% 0% 3%

US Airways(includes HP)
RPMs -6% 2% -11% -6%
ASMs -10% 6% -11% -8%

Note the size of DL's Atlantic and Latin growth - far larger than any other carrier's in any other regions. To pull off a slight loss internationally on that kind of capacity growth is amazing.


User currently offlineLAXdude1023 From India, joined Sep 2006, 7562 posts, RR: 25
Reply 15, posted (7 years 11 months 5 days 16 hours ago) and read 3141 times:

Quoting WorldTraveler (Reply 13):
DL really does have a plum route in ATLNRT. Time will tell if they can replicate it with other routes to Asia but I know it will shake a lot of people to the core if DL expands Asia from ATL and yet continues to report industry leading financial performance to Asia from an ATL-based Asian operation

Do you have the figures for ATL-NRT vs DFW-NRT or ORD-NRT? To compare DL's ONE asian route to all the other carriers MANY asian routes is not a good comparison. To make this fair and unbiased you would need to look at the numbers to NRT. This will tell us how it REALLY preforms compared to other carriers. NRT is not all of Asia.

I do know that DL has made itself a huge player in Latin America and Europe and soon to be Africa and I comend them for this. Asia is a different ballgame.

[Edited 2006-09-27 20:35:30]


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User currently offlinePanamair From United States of America, joined Oct 2001, 4896 posts, RR: 25
Reply 16, posted (7 years 11 months 5 days 15 hours ago) and read 3118 times:
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Quoting WorldTraveler (Reply 13):
Given that fares are high to Europe in the summer and demand was strong, it makes sense

However, three of the five 764 TATL routes this summer (ATL-SNN, JFK-DUB/SNN, and especially JFK-MAN) were selling at pretty low fares even during the peak season (one could get JFK-MAN for about $250 one-way in May and early June). Of the three, JFK-DUB/SNN performed the best and certainly had the loads to make up for the lower fares; ATL-SNN was a disappointment and won't be coming back next summer while JFK-MAN was quite iffy loads-wise and certainly not helped by the low fares.


User currently offlineLemurs From United States of America, joined Mar 2005, 1439 posts, RR: 4
Reply 17, posted (7 years 11 months 5 days 15 hours ago) and read 3098 times:

Quoting WorldTraveler (Reply 14):
Note the size of DL's Atlantic and Latin growth - far larger than any other carrier's in any other regions. To pull off a slight loss internationally on that kind of capacity growth is amazing.

Only if you combine them together. Put CO and DL Atlantic operations side by side and you see a different picture...same scale of growth, but less growing pains for CO than DL. Their growth their drove their revenue. DL's profitability was driven by their ruthless cutbacks on domestic overcapacity. All very good and necessary for their health by the way, no argument...but it doesn't make a convincing argument that "Domestic is where it's at."

The only operator at the moment who has a serious long-term plan (with orders to back it up) for domestic growth is CO. UA seems to be feeling their way around...everyone else is trying to "right size" their domestic networks.



There are 10 kinds of people in the world; those who understand binary, and those that don't.
User currently offlinePanAm330 From United States of America, joined Mar 2004, 2672 posts, RR: 9
Reply 18, posted (7 years 11 months 5 days 15 hours ago) and read 3098 times:

Fantastic numbers! It's about time things turned around for everyone. Hopefully we will see the trend continue, but isn't 3Q traditionally the slow quarter?

User currently offlinePlanemaker From Tuvalu, joined Aug 2003, 6146 posts, RR: 35
Reply 19, posted (7 years 11 months 5 days 14 hours ago) and read 3036 times:

Quoting Airbazar (Reply 4):
How can you say that "Domestic is where it's at" when the only airlines that did strongly domestically are the one that are in BK

What doesn't figure in the Legacy domestic numbers are the RJ operators' numbers. To have a true picture for the Legacy carriers you would have to include these numbers with their high CASMs. Now that would be interesting!

Quoting PanAm330 (Reply 18):
Fantastic numbers! It's about time things turned around for everyone. Hopefully we will see the trend continue, but isn't 3Q traditionally the slow quarter?

And how long until the employee groups start asking for their share of the profit pie given that they have given up so much?



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User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 20, posted (7 years 11 months 5 days 9 hours ago) and read 2954 times:

Quoting Panamair (Reply 16):
However, three of the five 764 TATL routes this summer (ATL-SNN, JFK-DUB/SNN, and especially JFK-MAN) were selling at pretty low fares even during the peak season (one could get JFK-MAN for about $250 one-way in May and early June). Of the three, JFK-DUB/SNN performed the best and certainly had the loads to make up for the lower fares; ATL-SNN was a disappointment and won't be coming back next summer while JFK-MAN was quite iffy loads-wise and certainly not helped by the low fares.

The obvious question is how much money those planes coud have made if they had flown in the US. The answer is undoubtedly that they made more money flying internationally. SNNATL was just too big of a plane. But you forget to mention ATLLGW #3 and ATLFCO #2, both markets that had very strong loads, and undoubtedly revenues since those markets were also business elite routes with the 764 adding extra coach capacity. Don't worry... DL's execs have said they will be back next summer but probably not on JFK-Ireland or JFK-MAN or ATL-SNN.

Quoting Lemurs (Reply 17):
Put CO and DL Atlantic operations side by side and you see a different picture...same scale of growth

Percentages are percentages. CO did not grow as fast. Period.

Quoting Lemurs (Reply 17):
The only operator at the moment who has a serious long-term plan (with orders to back it up) for domestic growth is CO.

You apparently overlooked the statement that CO was the only carrier that lost money on the domestic system - just as they did a year ago. They better have a plan because they need it. Problem is, no one has ever grown a route system to profitability.

Quoting Planemaker (Reply 19):
What doesn't figure in the Legacy domestic numbers are the RJ operators' numbers. To have a true picture for the Legacy carriers you would have to include these numbers with their high CASMs. Now that would be interesting!

which is why you also have to read the major carriers' financial statements where it all comes together. DOT data looks at it all in a very piecemeal fashion. The major carrier is responsible for putting all of the pieces together in a way that makes money.


User currently offlineLemurs From United States of America, joined Mar 2005, 1439 posts, RR: 4
Reply 21, posted (7 years 11 months 5 days 9 hours ago) and read 2936 times:

Quoting WorldTraveler (Reply 20):
Percentages are percentages. CO did not grow as fast. Period.

Then you botched up your numbers, because you have Atlantic growth for both at 18% RPM 20% ASM. Percentages are percentages, and according to your percentages, CO *did* grow as fast. I'm willing to believe that was just a transcribal error though, happens all the time.

Quoting WorldTraveler (Reply 20):
You apparently overlooked the statement that CO was the only carrier that lost money on the domestic system - just as they did a year ago. They better have a plan because they need it. Problem is, no one has ever grown a route system to profitability.

I didn't miss it, I just don't see it as a particularly bad omen given the continued growth of the international sector. They're scaling back RJ ops, adding dozens of larger mainline ships, (65 738 and 739's on firm order), and accelerated their winglet adoption plan to completion years ahead of schedule to get cost savings benefits. They're going to use that domestic capacity to feed their growing Int'l ops. To top it off, they've done it all without a bitter and protracted fight with their unions.

If that's not a plan, I'm not sure what is.



There are 10 kinds of people in the world; those who understand binary, and those that don't.
User currently offlineLAXdude1023 From India, joined Sep 2006, 7562 posts, RR: 25
Reply 22, posted (7 years 11 months 5 days 9 hours ago) and read 2926 times:

Quoting WorldTraveler (Reply 20):
SNNATL was just too big of a plane. But you forget to mention ATLLGW #3 and ATLFCO #2, both markets that had very strong loads, and undoubtedly revenues since those markets were also business elite routes with the 764 adding extra coach capacity.

DL could definately use the 764's on routes that are bigger than ATL-Ireland. I think they could be best used on LGW, FCO, CDG, FRA, etc, from ATL. They could definately fill the planes. I would like to see it on ATL-SVO but I dont see it.



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User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 23, posted (7 years 11 months 5 days 8 hours ago) and read 2901 times:

lemurs, you are right. I was looking at the Latin growth rather than the TATL growth. However, CO still grew capacity less than DL but they increased traffic at a comparable rate - meaning CO's LF had to go up.

The point I made above is that DL incurred alot of costs in starting up their new TATL routes. Their yields are comparable year over year. Also, I don't think anyone doubts that CO had better managed its NYC transatlantic system up to this point so they are building on a position of strength. DL is trying to fix JFK to Europe. Many of the JFK connection routes didn't start until after the 2nd quarter closed and some didn't start until a couple weeks ago. Also, CO didn't start anywhere close to as many routes; they increased capacity on many existing routes, though. CO's growth profile is considerably different than DL's.

I haven't pretended to say that DL's int'l expansion has been flawless but they could never have achieved what they did on their domestic system if they didn't move those 767s somewhere. And the indications are that DL's int'l growth is working, although they need to slow it down if they want the results to be apparent.

As for CO on the domestic system, converting to mainline and using bigger jets may indeed help. But the point is that CO's domestic system is in just as bad of a shape as DL's int'l route system - and in the end DL was able to report a better system profit than was CO - which validates my whole point of the this thread that if you can't make domestic work, you can't have a profit-leading airline. And conversely, a successful domestic system can cover alot of int'l ills, as DL has done.

All of the western European routes did indeed see 764s this summer. ATLSVO has a strong business class component and will always be a BE aircraft. It is also probably at the edge of a 764's range if the plane is configured in all coach. The bigger issue is that DL is the only US carrier flying to Russia; there is no reason to flood the market w/ seats. Control capacity and you can increase your yields. Use the 764s on highly competitive routes where if you dno't offer the capacity, someone else will.


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