LAXintl
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US Carriers International Route Profitability

Wed Oct 24, 2012 2:06 pm

In the past I have posted US network carrier international route profitability numbers as reported in DOT financial filings.

I was asked to do an update - here are the numbers for 2nd quarter 2012.

Reported Operating Profit margin percentage (CASM-RASM) / yield cents

Atlantic
AA - 1.1% / 13.72
DL - (3.5%) / 14.04
UA - 7.8% / 15.15
US - 3.6% / 12.96

Latin
AA - 9.4% / 16.89
AS - 8.3% / 12.70
DL - (12.3%) / 13.83
UA - 16.0% / 16.40
US - 13.8% / 15.36

Pacific
AA - (9.8%) / 12.19
DL - 12.8% / 13.86
HA - 12.1% / 13.31
UA - 18.1% / 15.53


Source: Form 41.
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SFOA380
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 2:12 pm

Suprising that UA TPAC is the strongest considering how much of it so long......
 
LAXintl
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 5:20 pm

Historically for UA its Pacific ops were the most profitable, however with its ATI and regauge of capacity on the Atlantic, that performance has improved quite a bit. For CO its Latin ops were the best.
Will be interesting to see which one eventually produces the best returns for the merged operation.

For AA, no surprise Latin America is the winner, and for Delta, the Pacific has been generating the profit.
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Bobloblaw
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 7:48 pm

Delta must be making a gold mine domestically to make up for those poor international numbers. AA is getting killed on Chicago-China and Haneda.
 
codc10
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 8:02 pm

Quoting bobloblaw (Reply 3):
Delta must be making a gold mine domestically to make up for those poor international numbers. AA is getting killed on Chicago-China and Haneda.

And conversely, United's domestic network must be a pretty big loser.
 
jetlanta
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 8:58 pm

Oh god, here we go again.

The way that carriers allocate revenue and expenses on connecting itineraries is reported differently by each. For some, the pro-ration, as reported on Form 41, makes profitability look worse than others.

I'll direct anyone who really thinks that Delta is seeing margins like this on international routes to look at today's earnings release.

It just is not apples-to-apples between carriers.
 
LAXintl
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RE: US Carriers International Route Profitability

Wed Oct 24, 2012 9:22 pm

Quoting jetlanta (Reply 5):
I'll direct anyone who really thinks that Delta is seeing margins like this on international routes to look at today's earnings release.

Its still fair to compare a carriers relative own performance.

For example Delta managing director of market development said the carrier does poorly in Latin America and no surprise here the numbers reflect that.

Latin America: Most Profitable For US Airlines (by LAXintl Jul 18 2012 in Civil Aviation)

=
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mercure1
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RE: US Carriers International Route Profitability

Thu Oct 25, 2012 3:04 pm

Very interesting.

Regardless of inside accounting method by enterprises it seems to show how each airline does for itself.

Delta for instance have bigger problems in South America, Europe was also problem, while Asia looks positive for enterprise.
 
LAXintl
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 3:24 pm

Quoting mercure1 (Reply 7):
Regardless of inside accounting method by enterprises it seems to show how each airline does for itself.

Correct. Can be interesting to view how each segment does internally at the carriers and goes to shed light things long suspected -- such as how a carrier might have a gold mine in one region and weakness in another. For instance AA's forte and cash machine has been Latin America, while Pacific has been its achilles heal.
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LAXdude1023
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 3:46 pm

Quoting LAXintl (Reply 8):
For instance AA's forte and cash machine has been Latin America, while Pacific has been its achilles heal.



I would argue that (specifically) AA's achilles hill is China.
It is what it is...
 
LAXintl
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 5:29 pm

I don't think Haneda helps either.

But going back years, Pacific has always been hit or miss for AA, so even the core Narita stuff has been weak.

Though hopefully now with the JAL joint venture, these routes will perform better.
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kgaiflyer
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 5:40 pm

Quoting LAXdude1023 (Reply 9):
AA's achilles hill is China.

No criticism.

I know what you mean.

Nevertheless, it made me smile  
 
airbazar
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 5:50 pm

Does this include revenue sharing flights? For instance, how much of DL's TATL numbers are affected by AF's terrible losses? Similarly, how much of UA's TATL numbers are helped by LH's profits?
 
LAXdude1023
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RE: US Carriers International Route Profitability

Fri Nov 02, 2012 6:19 pm

Quoting LAXintl (Reply 10):
I don't think Haneda helps either.

But going back years, Pacific has always been hit or miss for AA, so even the core Narita stuff has been weak.

Yeah, forgot about HND.

DFW-NRT is really their only shinging star over the Pacific. Even it didnt do as good last year (for obvious reasons).

Quoting kgaiflyer (Reply 11):
No criticism.

I know what you mean.

Nevertheless, it made me smile

He might have had a hill too!  
It is what it is...
 
Bobloblaw
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RE: US Carriers International Route Profitability

Sun Nov 04, 2012 6:30 pm

I should add that it looks like DL's attempt to position ATL as a strong Latin competitor to MIA isn't working.
 
LAXintl
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RE: US Carriers International Route Profitability

Mon Nov 05, 2012 3:49 pm

Yes JV revenues are mixed in there, however its only applicable for the portion of the flying operated by the respective US airline (often on ASM basis). Also remember not all of a specific regions flying is under JV.

So the reported numbers at the end are still respective of the revenue minus the cost to provide the service.
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mercure1
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RE: US Carriers International Route Profitability

Mon Nov 19, 2012 7:57 pm

Fascinating insight.

For UA, I recall reading CEO stated he only wished to operate a domestic network large enough to provide enough feed for its international network which would represent 50% of airline activity.

So looks indeed like UA does quite well internationally, overall best of US airlines.
 
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IrishAyes
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RE: US Carriers International Route Profitability

Mon Nov 19, 2012 8:45 pm

Quoting LAXdude1023 (Reply 9):
I would argue that (specifically) AA's achilles hill is China.

My roommate from college has been living in PEK for a year and was visiting this past weekend. He told me his o/w flight from ORD to PEK yesterday on AA cost him $640.

Nuts.

I was under the impression though that AA's TPAC routes had showed improvements in recent quarters. I wonder how much of that was aided by the removal of ORD-DEL, but to me it's always been ambiguous whether that was included in TATL or TPAC calculations.
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LAXintl
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RE: US Carriers International Route Profitability

Mon Nov 19, 2012 10:18 pm

India falls under Atlantic entity reporting for the DOT.
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NWADTWE16
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RE: US Carriers International Route Profitability

Thu Nov 22, 2012 5:30 am

Deltas US-GRU/GIG routes are really maturing from what i can see daily load wise and assuming Delta/NW great success with cargo atleast this part of LatAm should improve in stats next year
 
klwright69
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RE: US Carriers International Route Profitability

Thu Nov 22, 2012 8:05 am

Quoting NWADTWE16 (Reply 19):
Deltas US-GRU/GIG routes are really maturing from what i can see daily load wise and assuming Delta/NW great success with cargo atleast this part of LatAm should improve in stats next year

Yes. Recall I initiated a thread a few months ago, where a DL 767 copilot told me DL wanted to put the 747 on ATL to GRU/GIG, but Brazilian government/avaition authority is not keen on this at the present time.
 
klwright69
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RE: US Carriers International Route Profitability

Thu Nov 22, 2012 8:16 am

Sorry for my ignorance. The statistics look interesting. Could someone explain exactly what they mean in clear language? How are they calculated? Are they calculated with the same method across the different airlines?

I suppose the numbers in parenthesis are negative? If this is so, how could DL be losing money on Atlantic routes? DL has always led across the Atlantic.
 
toobz
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RE: US Carriers International Route Profitability

Thu Nov 22, 2012 10:47 am

DL certainly does not lose money on Atlantic routes... DL has a different formula for calculating expenses and different way of reporting....LAX i get what you r saying but if the numbers you report frequently are accurate...DL would be losing a sh$%load of money...thats not the case.
 
LAXintl
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RE: US Carriers International Route Profitability

Thu Nov 22, 2012 6:12 pm

Historically Atlantic might have been good for Delta, however the last couple years have been very challenging.

Look the number of markets dropped, and overall capacity cuts instituted along with rationalization with JV AF/KL.

The Atlantic segment has seen the largest percentage capacity reductions at Delta, with the segment characterized as "tenuous" at a recent earnings call.

So yes things are not all smiles and raking in the dollars while flying across the pond.


p.s. - remember the posted the numbers are reported by the airlines themselves. So itself Delta is saying its losing money across the Atlantic.

[Edited 2012-11-22 10:42:46]
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