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US Carriers International Route Profitability  
User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Posted (7 years 2 months 3 weeks 6 days 17 hours ago) and read 3840 times:

Ran across document highlighting the profit margin of US network carriers international flying for the 2nd quarter 2007 per ASM.

Atlantic
AA +17.7%
CO +38.2%
DL +3.2%
NW +27.7%
UA +27.1%
US +9.4%

Latin
AA +7.4%
CO +36.2%
DL (-1.3%)
UA +4.4%
US +16.8%

Pacific
AA +4.8%
CO +11.9%
DL +7.3%
NW (-1.2)
UA +15.9%

Couple things stand out for me
-DL Atlantic profitability margin lags its peers by far. Obviously lots of new routes have start up cost and take time to mature
-Surprised AA's Latin margins are not stronger consider is strenght in the region. CO outperforms everyone by far.
-NW loosing money on its vast Pacific network for the quarter.


Full document including additional charts can be found at: (subscription required)
http://www.aviationnow.com/publicati...C+By+Region%2C+Second+Quarter+2007


From the desert to the sea, to all of Southern California
39 replies: All unread, showing first 25:
 
User currently offlineShane From United States of America, joined Oct 2005, 180 posts, RR: 0
Reply 1, posted (7 years 2 months 3 weeks 6 days 16 hours ago) and read 3772 times:

Why such impressive performance by CO down south?

User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 2, posted (7 years 2 months 3 weeks 6 days 13 hours ago) and read 3632 times:

I suspect one reason for CO's Latin America success could be result of the many unique Mexico RJ routes it offers at IAH hub which attract a good deal of US business traffic.


From the desert to the sea, to all of Southern California
User currently offlinePanamair From United States of America, joined Oct 2001, 4973 posts, RR: 25
Reply 3, posted (7 years 2 months 3 weeks 6 days 13 hours ago) and read 3607 times:
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What's interesting about the CO numbers is that with such huge margins for international, domestic must have continued to be a real stinker since CO's overall Q2 2007 operating margin was only 7.1%...

User currently offlineN1120A From United States of America, joined Dec 2003, 26810 posts, RR: 75
Reply 4, posted (7 years 2 months 3 weeks 6 days 13 hours ago) and read 3599 times:

Quoting Laxintl (Reply 2):
I suspect one reason for CO's Latin America success could be result of the many unique Mexico RJ routes it offers at IAH hub which attract a good deal of US business traffic.

That is absolutely the key there. Also, remember that they do a fair bit do South America as well.

Quoting Panamair (Reply 3):
domestic must have continued to be a real stinker since CO's overall Q2 2007 operating margin was only 7.1%...

Well, not necessarily. Remember that a lot of those international margins are bolstered by writing down the cost of getting the people to a hub as a loss. Creative accounting.



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 5, posted (7 years 2 months 3 weeks 6 days 13 hours ago) and read 3599 times:

Quoting Panamair (Reply 3):
domestic must have continued to be a real stinker since CO's overall Q2 2007 operating margin was only 7.1%...

 checkmark  CO domestic had a -3.9% operating margin in Q2.



From the desert to the sea, to all of Southern California
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17824 posts, RR: 46
Reply 6, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3551 times:

Quoting Laxintl (Thread starter):
-NW loosing money on its vast Pacific network for the quarter.

I thought NW's Pacific network was just not as profitable as everyone thought; turns out it's just not profitable. That NRT hub has got to be one expensive albatross.



E pur si muove -Galileo
User currently offlineN1120A From United States of America, joined Dec 2003, 26810 posts, RR: 75
Reply 7, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3533 times:

Quoting MaverickM11 (Reply 6):
That NRT hub has got to be one expensive albatross.

Actually, I would bet that the expensive albatross is all the flights out of MSP.



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlineMAH4546 From Sweden, joined Jan 2001, 33280 posts, RR: 71
Reply 8, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3512 times:

Quoting Shane (Reply 1):
Why such impressive performance by CO down south?

I think the bigger question is why are DL's numbers to the region so unimpressive.



a.
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 9, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3495 times:

Quoting MAH4546 (Reply 8):
I think the bigger question is why are DL's numbers to the region so unimpressive.

Too many thin money-bleeding routes on f'n CRJs would be my guess  Wink , at least part of the problem.


User currently offlineJetlanta From United States of America, joined Jul 2001, 3365 posts, RR: 35
Reply 10, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3463 times:

Quoting MAH4546 (Reply 8):

I think the bigger question is why are DL's numbers to the region so unimpressive.

JFK is the primary cause for the Atlantic. That was largely addressed today.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3462 times:

Quoting Panamair (Reply 3):
What's interesting about the CO numbers is that with such huge margins for international, domestic must have continued to be a real stinker since CO's overall Q2 2007 operating margin was only 7.1%...

absolutely.

Selective cutting and pasting of data is irresponsible; I'm not sure that Avaition daily considers leaving out 1 of 4 data groupings is enough to protect their copyrights.

If laxintl had also posted the domestic numbers, we would see that CO was not profitable in the domestic arena (again) and that DL, NW, and US were all very profitable (more than 2 cents per ASM on their domestic system).

GIven that no US airline is more than 50% international, you can't be competitive financially unless you can make money domestically.

DL is clearly making money on its domestic system in bucket loads in order to help support its international expansion.

Despite NW's substantial domestic and transatlantic profits, it lost money on their Pacific system at the same rate DL did in Latin America (very small).

Note also that UA said that it is considering asset sales (Chicago Trib). Perhaps their NRT hub since UA is profitable and has many NRT overfly routes while NW does not. NRT is valuable for the local traffic rights but not as a hub.

Also, note that US' numbers are for US East. HP lost money.


User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 12, posted (7 years 2 months 3 weeks 6 days 12 hours ago) and read 3429 times:

Quoting WorldTraveler (Reply 11):
If laxintl had also posted the domestic numbers,

Thread is about Intl profitability, hence no need or desire to list domestic earnings.

There has been much growth and focus on international flying by US carriers recent years, and felt it would be interesting to see how carriers stack up profitwise with their peers.

Quoting WorldTraveler (Reply 11):
Selective cutting and pasting of data is irresponsible; I'm not sure that Avaition daily considers leaving out 1 of 4 data groupings is enough to protect their copyrights.

I actually left very much out. RASM, CASM, yield charts were excluded. I simply posted a summary of their operating margins.

For the full data, either sift thru the DOT data directly, or subscribe to AvDaily for the combined pretty charts.



From the desert to the sea, to all of Southern California
User currently offlineFlavio340 From United States of America, joined Oct 2005, 180 posts, RR: 0
Reply 13, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3391 times:

[QUOTE]Note also that UA said that it is considering asset sales (Chicago Trib). Perhaps their NRT hub since UA is profitable and has many NRT overfly routes while NW does not. NRT is valuable for the local traffic rights but not as a hub.[QUOTE]

WorldTraveler I am sorry I have not read the article but are you saying that UA is considering selling off its NRT hub? That would not surprise me since all of their Asian routes are accessible either direct from SFO, or through HKG.

Who would be some potential buyers for NRT? My money would be on AA
Also does anyone know if UA can sell the hub with the way the bilateral is written? It is my understanding that it has to be an operating certificate change, much like when AA bought TWA to get the access to LHR.

I find it surprising that all the carriers (CO excepted) posted their weakest margins in the areas where the airlines have the strongest presence. AA Latin America (+7.4), DL Atlantic (+3.2), UA pacific (+15.9), NW Pacific (-1.2), US Atlantic (+9.4)
Could this be because this is where the airlines have the most seats flying therefore the greatest chance of flying empty seats during off peak times?


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 14, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3388 times:

Quoting Laxintl (Reply 12):
Thread is about Intl profitability, hence no need or desire to list domestic earnings.

which is meaningless. No airline operates as an international or domestic entity. They are one airline.

Failing to properly address (or even bother to mention the total picture) is irresponsible.

It also is irresponsible to fail to show the capacity changes in each of those entities. The reason why some airlines (like DL) are making money domestically now is because they cut capacity. Believe it or not, not all carriers are adding capacity in every entity. CO's Latin capacity is virtually flat while UA continues to pull capacity to Latin America - major drivers in determining profitability.

I read the data and know exactly what it said... and what you excluded.

Again, use the data responsibly or leave it to people who will.


User currently offlineTravelin man From United States of America, joined Mar 2000, 3556 posts, RR: 0
Reply 15, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3349 times:

Quoting WorldTraveler (Reply 14):
which is meaningless. No airline operates as an international or domestic entity. They are one airline.

Failing to properly address (or even bother to mention the total picture) is irresponsible.

It also is irresponsible to fail to show the capacity changes in each of those entities. The reason why some airlines (like DL) are making money domestically now is because they cut capacity. Believe it or not, not all carriers are adding capacity in every entity. CO's Latin capacity is virtually flat while UA continues to pull capacity to Latin America - major drivers in determining profitability.

I read the data and know exactly what it said... and what you excluded.

Again, use the data responsibly or leave it to people who will.

Oh please. He posted an interesting comparison of profit margins on US airlines for various international regions. I think it is interesting data, and I am glad he posted it. He didn't draw "irresponsible" conclusions or anything like that.

Your use of the word "irresponsible" is irresponsible (and silly).


User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 16, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3349 times:

Quoting WorldTraveler (Reply 14):
which is meaningless. No airline operates as an international or domestic entity. They are one airline. Failing to properly address (or even bother to mention the total picture) is irresponsible.

As I said its meant to look at International margins of US carriers. You want to know about their domestic performance then you can research them.

At the end of the day, if you dont like this topic, then disregard it. Others have found the information interesting.



From the desert to the sea, to all of Southern California
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 17, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3335 times:

no, I will not disregard it. You can either RESPONSIBLY post the total picture or other people will do it for you and trash your credibility in the process.

Data can be manipulated any number of ways... cutting a piece here or there is irresponsible and exactly why people like you will be challenged when you fail to appropriately handle it.


User currently offlineMAH4546 From Sweden, joined Jan 2001, 33280 posts, RR: 71
Reply 18, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3329 times:

Quoting Travelin man (Reply 15):
Oh please. He posted an interesting comparison of profit margins on US airlines for various international regions. I think it is interesting data, and I am glad he posted it. He didn't draw "irresponsible" conclusions or anything like that.

Don't try to argue. The numbers aren't flattering for Delta, so therefore they are not good figures. Pretty simple.



a.
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 19, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3306 times:

it has nothing to do with Delta. They aren't terribly flattering for AA but I didn't go there.

It also would lead one to not know that NW's domestic operation significantly supports its Pacific operation. On the other hand, CO's sterling international results mean very little when they lose money domestically (unique among network carriers) and had one of the lowest profit margins among US carriers for the quarter this data represents.

The point is that a few data points were pulled out of an article and presented. If you want to have an intelligent discussion, present all the facts and correctly interpret them.


User currently offlineLaxintl From United States of America, joined May 2000, 26150 posts, RR: 50
Reply 20, posted (7 years 2 months 3 weeks 6 days 11 hours ago) and read 3294 times:

Quoting WorldTraveler (Reply 17):
Data can be manipulated any number of ways

What did I manipulate? I simply posted a summary of each carrier International margins.

If you want to introduce facts about how domestic operations might prop up, or drag down international earnings then fine, however the international earning margins are what they are, and the topic of this post.



From the desert to the sea, to all of Southern California
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 21, posted (7 years 2 months 3 weeks 6 days 10 hours ago) and read 3255 times:

You simply do not want to understand that pulling a few random pieces of data out of a report and presenting them are not accepted in the business world or journalism. Do you see articles showing these kinds of stats in any published forum? Why do you think aviation daily presented them in a holistic picture - only to have you rip out pieces and present them in isolation.

I would strongly suggest that you learn to properly use the data you touch whether it be about airline profitability, mortgage rates, or fuel prices.


User currently offlineCOflyerBOS From United States of America, joined Jun 2007, 311 posts, RR: 0
Reply 22, posted (7 years 2 months 3 weeks 6 days 10 hours ago) and read 3202 times:

Irresponsible?

This is a message board for aviation enthusiasts. I find information on the profitablity of international flying on USA metal fascinating. It isn't for you to police these boards and approve/disapprove of topics of discussion.

Quite frankly, if you don't like it, start your own post about domestic flying. I'd be interested to read that one too. I am not overly interested in you taking over yet another thread with your Delta is the NEW WORLD ORDER propaganda.


User currently offlineMAH4546 From Sweden, joined Jan 2001, 33280 posts, RR: 71
Reply 23, posted (7 years 2 months 3 weeks 6 days 10 hours ago) and read 3194 times:

Quoting WorldTraveler (Reply 19):
it has nothing to do with Delta. They aren't terribly flattering for AA but I didn't go there.

Of course you didn't, because AA's are a lot better than DL's.

The point is that people can view this data as they like. Just because it doesn't give a complete picture, doesn't mean it doesn't give part of the picture. That's what people here are discussing.



a.
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17824 posts, RR: 46
Reply 24, posted (7 years 2 months 3 weeks 6 days 10 hours ago) and read 3171 times:

Quoting N1120A (Reply 7):
Actually, I would bet that the expensive albatross is all the flights out of MSP.

2 NRT flights with very unique connections in the Midwest sank the entire Pacific region?



E pur si muove -Galileo
25 Post contains images MasseyBrown : To get back to your topic, currency translations should be interesting this quarter and will probably cost all the US international carriers somethin
26 Laxintl : Yes the weak dollar can indeed shift numbers, however for some carriers favorably. For instance at United, it was internally mentioned the Atlantic d
27 Lt-AWACS : damn kid go start a thread with the numbers from the "business world" that some folks seem to have a better grasp of than others.... Delta's Int'l nu
28 MasseyBrown : It's an area where the airlines are used to hedging and their hedges don't need to be very long-term to afford protection. Still, I bet we'll see som
29 MaverickM11 : Are you sure?
30 BA744PHX : If that is the case why are they reducing their domestic flying????? I would think if they are making money they would expand to make more not reduce
31 MasseyBrown : I think the ones that will get hit the worst will be those with the worst debt ratios; and it won't take another 9/11 to do it - not even a serious r
32 Panamair : Actually, if one would take a moment and actually look at all the facts and stats, one would realize that even with all the international expansion,
33 FlyPNS1 : Amen. Yes. DL's domestic system is quite profitable. As you know, DL has shifted a lot of capacity from domestic to international. This has greatly i
34 Post contains images MaverickM11 : Do you have a link or something? I'm just surprised
35 FlyPNS1 : I don't have the link, but even if you don't believe me, you can see the profits just by looking at the international numbers. Internationally, DL ha
36 WorldTraveler : Let me reiterate once again that I have no problem with anyone posting any facts that are relevant - but do it inclusively and responsibly. Throwing o
37 Lt-AWACS : You are not a moderator (thank god) nor the forum police. People can post whatever they like, agenda or not in your mind. You posted your numbers, fi
38 Sebring : Fun, fun, fun. Second quarter numbers. How about the first quarter and the fourth quarter? We know second and third quarters are the best for interna
39 Justapassenger : Worldtraveler, If I say that DL’s international numbers are surprisingly good for an airline with such a high percentage of new routes with large st
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