FlyBoeing
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Look At These Statistics...

Wed Nov 07, 2001 3:01 am

In today's USA TODAY there are a couple of interesting articles on the airline industry. One of them has to do with the required load factors neccesary to break even for various airlines based on reduced airfares, fewer passengers, and schedule cutbacks:

UA: 96%
NW: 90%
HP: 88%
US: 88%
AA: 85%
DL: 85%
CO: 77%
AS: 75%
WN: 65%

United Airlines has gone certifiably insane when they have that kind of cost structure where they have to have their planes almost 25% more full than CO's aircraft in order to break even. It's pretty bad for NW too since they have fuel-inefficient airplanes which they HAVEN'T replaced even though interest rates are headed downward.

I'm a CO/WN fan and I'm even more of one now. A typical required load factor is, what, 70%? CO only increased their required load factors by 10% on top of that and it's easy to cut costs by parking the fleet.

UA is up shit's creek. They need every plane full all the time to make money.

But here's another thing from the same USA TODAY about WN. "If an airline such as Southwest tacked on 15 minutes to the time each plane spent on the ground, then it would need 100 additional planes to meet its daily schedule"

Security procedures are going to kill the high frequency flights, it seems. Maybe WN isn't as immune to this crisis as it seems...
 
FlyBoeing
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RE: Look At These Statistics...

Wed Nov 07, 2001 4:17 am

*just putting it back at the top again...*  Smile/happy/getting dizzy
 
FlyBoeing
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RE: Look At These Statistics...

Wed Nov 07, 2001 5:27 am

I did some thinking about it and realized that WN will probably be hit quite a bit harder given the new security procedures. Since they require that you recheck your own luggage each time with new security. (which adds time to the hub traffic) and they don't operate from the airports close to the cities, they're kinda in the hole here. They'll have to offer even more significant discounts now that the costs associated with traveling WN are higher. But WN's costs are higher too, so...

On the other hand, though, WN has a less risky system given that they have fewer cyclical passengers. You don't lose high-fare passengers in this situation.

What do you think?
 
AeroArgentina
Posts: 190
Joined: Tue May 08, 2001 4:28 am

RE: Look At These Statistics...

Wed Nov 07, 2001 7:01 am

I think all airlines will be hit hard. WN is also being hit hard, it just has an excellent corporate structure that will allow it to weather the storm much better than the rest (with the exception of CO which is almost as healthy as WN). WN is the only major airline in the US that has not laid anyone off. That speaks volumes and their employees will surely remember this when the time comes.
 
Continental
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RE: Look At These Statistics...

Wed Nov 07, 2001 7:53 am

That's great that the airline industry is recovering. Good to hear that UA is in first place, but I would like to see CO up in the 90s too.  Smile/happy/getting dizzy
 
FlyBoeing
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RE: Look At These Statistics...

Wed Nov 07, 2001 8:15 am

Uhhh... Continental, the list refers to the MINIMUM load factor required for the airlines to break even, not the actual load factors that they're experiencing.

Therefore your carrier Continental is relatively well off for a major carrier. UA is poorly off. Nobody has 96% load factors. Continental is closer to being profitable than anyone else.
 
Guest

RE: Look At These Statistics...

Wed Nov 07, 2001 8:20 am

Yeah, Continental, United is in LAST place while Southwest is in FIRST place. CO is 3rd (quite good).
 
bacardi182
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RE: Look At These Statistics...

Wed Nov 07, 2001 8:23 am

i wonder how AA doesn't need their planes so full with MRTC?
 
LoneStarMike
Posts: 2802
Joined: Sat Jul 01, 2000 1:02 pm

RE: Look At These Statistics...

Wed Nov 07, 2001 9:55 am

Here's another set of statistics regarding stock prices of most of the major carriers.The first price listed is what each airline closed at on 09/10/2001. The second price is what each airline's stock closed at on 09/17/2001, the first day that the stock market re-opened. The third price is what each airline closed at today.

AirTran
09/10/2001 closed at $6.00 per share
09/17/2001 closed at $3.62 per share
11/06/2001 closed at $5.05 per share

Alaska
09/10/2001 closed at $30.65 per share
09/17/2001 closed at $21.68 per share
11/06/2001 closed at $25.35 per share

America West
09/10/2001 closed at $8.60 per share
09/17/2001 closed at $3.00 per share
11/06/2001 closed at $1.85 per share

American
09/10/2001 closed at $29.70 per share
09/17/2001 closed at $18.00 per share
11/06/2001 closed at $18.36 per share

Continental
09/10/2001 closed at $39.64 per share
09/17/2001 closed at $17.72 per share
11/06/2001 closed at $17.85 per share

Delta
09/10/2001 closed at $37.25 per share
09/17/2001 closed at $20.64 per share
11/06/2001 closed at $24.20 per share

Northwest
09/10/2001 closed at $19.62 per share
09/17/2001 closed at $12.42 per share
11/06/2001 closed at $13.27 per share

United
09/10/2001 closed at $30.82 per share
09/17/2001 closed at $17.50 per share
11/06/2001 closed at $11.13 per share

US Airways
09/10/2001 closed at $11.62 per share
09/17/2001 closed at $5.57 per share
11/06/2001 closed at $4.79 per share

Southwest
09/10/2001 closed at $17.12 per share
09/17/2001 closed at $13.00 per share
11/06/2001 closed at $17.22 per share.

As you can see, Southwest is the only airline whose stock price has fully recovered from the events of September 11. Now let's hope it stays that way.  Smile

LoneStarMike

 
haveric
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RE: Look At These Statistics...

Wed Nov 07, 2001 10:19 am

You're right LONESTAR -- let's hope that only WN regains stock value because who cares about any other airline? I mean, no one works for them. Everyone knows that WN is about to send 737s to HKG, so who cares is AA and UA crash and burn?
Be a little less myopic about that hick of an airline.
 
LoneStarMike
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RE: Look At These Statistics...

Wed Nov 07, 2001 10:28 am

Haveric, I think you misunderstood my post. When I said "Now let's hope it stays that way", I meant I hoped that Southwest would be able to maintain it's share price. I was not implying that I hoped the other airlines did not recover. Sorry if I struck a nerve.

LoneStarMike

 
IMissPiedmont
Posts: 6200
Joined: Wed May 23, 2001 12:58 pm

RE: Look At These Statistics...

Wed Nov 07, 2001 10:53 am

Look at the source. USA Today is hardly what I consider a good source of news. I'll bet they took selected flights and used those for their report. If these numbers are accurate, all but CO, AS and WN are doomed.
The day you stop learning is the day you should die.
 
FlyBoeing
Topic Author
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RE: Look At These Statistics...

Wed Nov 07, 2001 11:44 am

I'm not being partisan here. I'm just stating some facts and some implications.
 
penguinflies
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RE: Look At These Statistics...

Wed Nov 07, 2001 3:00 pm

USA today and delays:

most efficient airport: Grand Forks, ND 100% ontime record

least efficient: Nome, Alaska 58%

And how did that affect the other 699.9/700 million paying airline customers?
 
Tango-Bravo
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RE: Look At These Statistics...

Wed Nov 07, 2001 3:02 pm

There is every reason to believe that the numbers are giving us a true picture of the load factors required, given today's yields, for the respective airlines to break even -- I work for one of these airlines and the numbers we hear from upper management agree, within a small "margin for error," with what we see in the USA Today article.

Keep in mind -- by the estimates of knowledgeable industry observers, 20% reductions in flights and employees typically saves only about 10% in overall costs.

Moreover, don't forget -- with the exception of Southwest, Continental and Alaska, all of the U.S. majors were losing money profusely before 9/11 in spite of reporting load factors in the 75% range. The reason: yields had declined sharply before 9/11; since then, yield has been in a freefall.



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