flyguychi
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Joined: Mon Mar 10, 2014 7:43 pm

US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:27 pm

Just a quick compilation of operating and net margins for US Airlines for Quarter 2, 2018. Keep in mind there are some anomalies/one time charges that really throw off some numbers ($319 million write down of depreciation costs at JetBlue, $79 million aircraft accounting special charge for Spirit, etc). Airlines are in order of Operating Revenue. This is mainly a place to easily compare a snapshot of margins and discuss Airlines finances.

Image
 
flyguychi
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:42 pm

As a comparison, Q2 2017 results:

OPERATING PROFIT/MARGIN

Alaska $493 Million 23.5%
Southwest $1.25 Billion 21.8%
Hawaiian $142 Million 21%
Jetblue $354 Million 19.2%
Delta $2.03 Billion 18.8%
Spirit $132 Million 18.8%
United $1.4 Billion 14%
American $1.54 Billion 13.8%

NET PROFIT/MARGIN

Alaska $296 Million 14.1%
Southwest. $746 Million 12.9%
Hawaiian. $80 Million. 11.9%
Jetblue. $211 Million. 11.5%
Delta $1.22 Billion. 11.34%
Spirit. $78 Million. 11.1%
United. $818 Million. 8.2%
American. $803 Million. 7.23%
 
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United787
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:49 pm

What is going on at JetBlue? If you can't make money in this market, what is going to happen when we have a correction or something else?

Spirit isn't looking so hot either?
 
PlanesNTrains
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:52 pm

United787 wrote:
What is going on at JetBlue? If you can't make money in this market, what is going to happen when we have a correction or something else?

Spirit isn't looking so hot either?


Check out the JetBlue earnings thread. It explains a lot about it, including that they had a one-time write-down of I believe $319M.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
flyguychi
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:53 pm

United787 wrote:
What is going on at JetBlue? If you can't make money in this market, what is going to happen when we have a correction or something else?

Spirit isn't looking so hot either?


Both had huge anomalies in their numbers. Jetblue decided to write down all depreciation costs on their Embraer fleet in one quarter, without that their operating margins would’ve been more in the 8-10% range (but still in the lower range of US carriers). Spirit also had an accounting charge which really messed with net income/margin. Look to their operating numbers for a more accurate representation.
 
Passedv1
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 9:56 pm

United787 wrote:
What is going on at JetBlue? If you can't make money in this market, what is going to happen when we have a correction or something else?

Spirit isn't looking so hot either?


They are getting ready for the AS-JB merger.
 
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aemoreira1981
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 10:01 pm

I have to wonder how these numbers look with debt ratios as well. JetBlue owns a lot of its A320 fleet now unencumbered with all of the lease buyouts it has undertaken (and Spirit bought 14 A319s off lease from AerCap in 2Q18), while American went into a lot of debt for new aircraft purchases (and sale-leasebacks). While most of the A320s of NK are leased (a few are financed, as are all of the A321s), most of NK's A319s are now fully owned frames. If push comes to shove, B6 has a lot of planes it can engage in sale-leasebacks for to raise cash.

As for Alaska, I suspect a lot of this has to do with integrating the VX fleet into AS. I have to believe that in a real emergency, AA may be in the worst position.
 
PlanesNTrains
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 10:11 pm

aemoreira1981 wrote:
I have to wonder how these numbers look with debt ratios as well. JetBlue owns a lot of its A320 fleet now unencumbered with all of the lease buyouts it has undertaken (and Spirit bought 14 A319s off lease from AerCap in 2Q18), while American went into a lot of debt for new aircraft purchases (and sale-leasebacks). While most of the A320s of NK are leased (a few are financed, as are all of the A321s), most of NK's A319s are now fully owned frames. If push comes to shove, B6 has a lot of planes it can engage in sale-leasebacks for to raise cash.

As for Alaska, I suspect a lot of this has to do with integrating the VX fleet into AS. I have to believe that in a real emergency, AA may be in the worst position.


I think AS added like 8 E175's to the regional fleet in the quarter, and yields looked to have taken a hit. They also continue to battle with DL and WN in the west, and with DL and B6 in the transcon markets. That is definitely leaving a mark as well.
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
airzona11
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Re: US Airlines Q2 2018 Profit and Margins

Thu Jul 26, 2018 11:01 pm

WN standing out on Operating and Net Margin.
 
capejet
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 3:12 am

AA will allow its basic economy passengers to carry a bag on board starting in September. Wont that mean less income? AA will no longer be charging for that bag, are they going to increase the fare $25.00 to make up for the loss in revenue?
 
LAXtoATL
Posts: 596
Joined: Mon Oct 26, 2009 3:55 am

Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 4:23 am

aemoreira1981 wrote:
I have to wonder how these numbers look with debt ratios as well. JetBlue owns a lot of its A320 fleet now unencumbered with all of the lease buyouts it has undertaken (and Spirit bought 14 A319s off lease from AerCap in 2Q18), while American went into a lot of debt for new aircraft purchases (and sale-leasebacks). While most of the A320s of NK are leased (a few are financed, as are all of the A321s), most of NK's A319s are now fully owned frames. If push comes to shove, B6 has a lot of planes it can engage in sale-leasebacks for to raise cash.

As for Alaska, I suspect a lot of this has to do with integrating the VX fleet into AS. I have to believe that in a real emergency, AA may be in the worst position.


AA has $6B in cash. While they carry a heavy amount of debt, which certainly is a problem, there huge cash hoard means they ride out all but the very worse situations. They certainly are not in the worst position.
 
LAXtoATL
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 4:25 am

capejet wrote:
AA will allow its basic economy passengers to carry a bag on board starting in September. Wont that mean less income? AA will no longer be charging for that bag, are they going to increase the fare $25.00 to make up for the loss in revenue?


On the earnings call AA said they are making the change because customers are choosing to fly competitors that allow a carry-on bag (i.e Delta). Interestingly, Delta said the same thing on their earnings call. AA believes the added revenue from increased ticket sales will more than make up for the lost bag revenue.
 
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SumChristianus
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 2:33 pm

LAXtoATL wrote:
capejet wrote:
AA will allow its basic economy passengers to carry a bag on board starting in September. Wont that mean less income? AA will no longer be charging for that bag, are they going to increase the fare $25.00 to make up for the loss in revenue?


On the earnings call AA said they are making the change because customers are choosing to fly competitors that allow a carry-on bag (i.e Delta). Interestingly, Delta said the same thing on their earnings call. AA believes the added revenue from increased ticket sales will more than make up for the lost bag revenue.

Vindicating WN on bags fly free?
UA DL LH NW AA WN --- Next IND-DEN-RIW UA A319/CR2
"Born in Wonder, Brought to Wisdom"
 
FriscoHeavy
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 2:43 pm

SumChristianus wrote:
LAXtoATL wrote:
capejet wrote:
AA will allow its basic economy passengers to carry a bag on board starting in September. Wont that mean less income? AA will no longer be charging for that bag, are they going to increase the fare $25.00 to make up for the loss in revenue?


On the earnings call AA said they are making the change because customers are choosing to fly competitors that allow a carry-on bag (i.e Delta). Interestingly, Delta said the same thing on their earnings call. AA believes the added revenue from increased ticket sales will more than make up for the lost bag revenue.

Vindicating WN on bags fly free?


Pretty much. No one can make a truly valid argument against it. It gives WN the appearance of offering tremendous value and people flock to them, even if they aren't the cheapest fare. The legacies can't make that claim.
Whatever
 
Flighty
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 3:01 pm

You guys are confusing a carry on fee with a checked bag fee. Not the same thing at all.

Southwest bags fly free has not been vindicated by legacies. Carry on fees are probably a huge profit center for Spirit, but AA tried it and their business is too different for it to work, at least right now. But the checked bag fees work just fine.
 
drdisque
Posts: 1177
Joined: Mon Mar 26, 2007 9:57 am

Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 3:40 pm

Has nothing to do with Bags Fly Free on WN.

Has everything to do with AA not implementing a good system for keeping carry-ons from BE passengers off the plane and matching DL who offers free carry-ons to BE passengers.
 
cledaybuck
Posts: 1627
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 3:53 pm

flyguychi wrote:
Just a quick compilation of operating and net margins for US Airlines for Quarter 2, 2018. Keep in mind there are some anomalies/one time charges that really throw off some numbers ($319 million write down of depreciation costs at JetBlue, $79 million aircraft accounting special charge for Spirit, etc). Airlines are in order of Operating Revenue. This is mainly a place to easily compare a snapshot of margins and discuss Airlines finances.

Image
Can you do these numbers without specials? It might give a better picture that way.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
Prost
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Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 4:59 pm

Is this the first quarter DL had larger revenue than AA?
 
ScottB
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Joined: Fri Jul 28, 2000 1:25 am

Re: US Airlines Q2 2018 Profit and Margins

Fri Jul 27, 2018 5:05 pm

Flighty wrote:
You guys are confusing a carry on fee with a checked bag fee. Not the same thing at all.


The point is that AA is dropping the carry-on bag fee because the Basic Economy product with the bag fee apparently is uncompetitive with DL's version which includes a complimentary carry-on bag; i.e. passengers choose DL over AA for this exact reason. By extension, one could reasonably conclude that WN's "Bags Fly Free" policy induces some appreciable number of passengers to choose WN over its competitors due to the feature of complimentary checked bags -- and in some cases, when WN isn't offering the lowest fare. There are probably even some who don't bother to check the competition's prices because they don't expect other carriers to match the value offered by WN (i.e. no change/cancellation fees as well).

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