MOBflyer From United States of America, joined Sep 2007, 1211 posts, RR: 3 Posted (7 years 7 months 5 days ago) and read 5228 times:
In the second quarter of this year, AA mainline had a CASM of $0.1580. They had passenger revenue of $4,375,000,000 over 41,718,000,000 available seat miles. Granted they have cargo and other ancillary revenues, but that equates to a mainline RASM of $0.1135, or a 39.2% LOSS!
Tango-Bravo From United States of America, joined Jun 2001, 3813 posts, RR: 26
Reply 4, posted (7 years 7 months 4 days 23 hours ago) and read 5052 times:
Quoting MOBflyer (Reply 3): My point was that for a passenger airline, their farebox recovery is incredibly awful!
And yet isn't AA among the leaders among U.S. legacies with regard to revenue generated per seat mile (RASM) on domestic routes? Hoping I'm not speaking in ignorance ...if I am, well, I will admit to doing so. Would like to see how AA's RASM in 2Q compared to other U.S. carriers.
First the accounting is not correct. Margin is revenue minus cost divided by cost. That gets to somewhere around -28%, not -39%. Just consider you bought something for $100 and sold it for $130, you margin is 30%.
Second, just using the example of cargo, it consumes fuel and labor and other items. You are considering its entry in the cost figure but disregarding it in the revenue entry - another unnatural thing in accounting. In short, your CASM/RASM are apples and oranges.
I still agree the results are awful.
MOBflyer From United States of America, joined Sep 2007, 1211 posts, RR: 3
Reply 6, posted (7 years 7 months 4 days 21 hours ago) and read 4697 times:
Quoting Incitatus (Reply 5): First the accounting is not correct. Margin is revenue minus cost divided by cost.
Um actually, margin is profit/loss as a percentage of revenue so that would be:
Just as if you bought something for $100 and sold it for $130, your margin would be [$30]/[$130] or 23%. Your markup would be 30%, but your margin would be 23%. The -28% you describe is a markdown, not a margin.
Please research your methods before attacking someone's factual statements.
Quoting Incitatus (Reply 5): Second, just using the example of cargo, it consumes fuel and labor and other items. You are considering its entry in the cost figure but disregarding it in the revenue entry - another unnatural thing in accounting. In short, your CASM/RASM are apples and oranges.
Indeed. However PRASM (passenger revenue per available seat mile) is not an unusual performance metric for airlines, as many airlines use it in their annual and quarterly reports. (I know for a fact NW does, and they have a substantial cargo operation as well) I would also argue that the cost of cargo services is minute relative to the cost of the passenger side of the business.
MasseyBrown From United States of America, joined Dec 2002, 6144 posts, RR: 7
Reply 7, posted (7 years 7 months 4 days 8 hours ago) and read 4313 times:
I believe CASM for the second quarter includes $1.1 billion in write-downs of ERJ and MD-80 aircraft, a one-time charge distorting figures for the period. If you look at the previous and subsequent quarters the difference is apparent.
Personal rant: The constantly recurring "non-recurring" charges for aircraft write-downs are annoying. Irrespective of how long the wings stay attached, the economic life of commercial aircraft based on their purchase price has been (and seems to remain) about 15 years, which should also be the depreciable life of the asset. The much-longer depreciation periods allowed under current tax laws are unrealistic, inflating earnings early in the aircraft's life and causing the inevitable write-down at retirement.
The best time to plant a tree is today. The second best time is tomorrow.
EA CO AS From United States of America, joined Nov 2001, 15347 posts, RR: 60
Reply 8, posted (7 years 7 months 4 days 5 hours ago) and read 3518 times:
It's probably worth noting that (when profitable, anyway) most U.S. carriers make money not on ticket revenue, but ancillary revenues such as service fees, their mileage programs, affinity card agreements, etc.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan