Flybird
Topic Author
Posts: 33
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AA post Q3 2018 earnings

Thu Oct 25, 2018 11:47 am

“Unfortunately, higher fuel prices increased our expenses by approximately $750 million versus the third quarter of 2017, which led to a decline in earnings", Doug Parker, Chairman and CEO.

Operating revenue: $11.6 billion, +5.4% YoY

PRASM: +1.8%

CASM: +9.4%

GAAP EPS: $0.74

Adjusted EPS: $1.13

Total Operating Expenses: $10.9 billion, +12.4% (driven by a 42.6% increase in consolidated fuel expense.)

Dividends Paid: $46 million

https://news.alphastreet.com/american-a ... k-results/
 
MIflyer12
Posts: 5388
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 11:56 am

Per the SEC filing:

Operating income, $649 million

Net income, $341 million

About 1/2 what Delta made, or about what Southwest made on 1/2 the revenue.
 
N757ST
Posts: 703
Joined: Sat Feb 16, 2002 6:00 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 12:04 pm

225 million dollar a quarter expense to service their 22+ billion dollar debt load. Ouch.
 
gen2stew
Posts: 149
Joined: Mon Dec 12, 2011 10:15 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 12:23 pm

Time to DITCH DOUG and the TOOLS from TEMPE
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
Prost
Posts: 2405
Joined: Wed Oct 03, 2012 6:23 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 12:35 pm

It sounds as though they’ll be deferring some planes and cutting some routes. AA has a more modern fleet than DL, yet seem to lean on fuel expenses as the reason for the decreased profit.

UAL seems to have found a path to better profitability, I hope AA finds their path as well.
 
TWFlyGuy
Posts: 394
Joined: Mon Apr 17, 2017 5:10 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 12:47 pm

It's seeming more and more like letting Kirby walk has been the biggest loss so far.
 
N766UA
Posts: 8212
Joined: Thu Jul 29, 1999 3:50 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:02 pm

DL and UA had strong quarters, in part due to significant increases in bookings of premium seats. AA, on the other hand, has been jamming more seats in and making their airplanes as uncomfortable as possible. I like to think there’s a correlation here that will be a positive for overall passenger comfort going forward.
 
panamair
Posts: 4086
Joined: Fri Oct 12, 2001 2:24 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:08 pm

The earnings did exceed Wall Street expectations so the stock is trading up pre-market but they do look rather underwhelming compared to their two legacy peers.

Operating Revenues
DL $11.95 billion
AA $11.56 billion
UA $11.0 billion

Operating Profit GAAP
DL $1.64 billion (13.7% margin)
UA $1.20 billion (10.9% margin)
AA $649m (5.6% margin)

Operating Profit excluding specials:
DL $1.63 billion (13.6% margin)
UA $1.22 billion (11.1% margin)
AA $866 million (7.5% margin)

Pre-Tax Income GAAP
DL $1.67 billion (14.0% margin)
UA $1.06 billion (9.6% margin)
AA $456 million (3.9% margin)

Pre-Tax Income excluding specials:
DL $1.60 billion (13.4% margin)
UA $1.06 billion (9.7% margin)
AA $688 million (6.0% margin)

Net Income GAAP
DL $1.3 billion (11.0% margin)
UA $836 million (7.6% margin)
AA $341 million (3.0% margin)

Net Income excluding specials:
DL $1.24 billion (10.3% margin)
UA $837million (7.6% margin)
AA $523 million (4.5% margin)
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:09 pm

Prost wrote:
It sounds as though they’ll be deferring some planes and cutting some routes. AA has a more modern fleet than DL, yet seem to lean on fuel expenses as the reason for the decreased profit.

UAL seems to have found a path to better profitability, I hope AA finds their path as well.



Derek Kerr just said no changes for the next three years regarding current aircraft orders. Where does it sound like routes will be getting reduced?
 
flyguy84
Posts: 770
Joined: Thu Dec 22, 2016 7:26 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:10 pm

AA continues the race to the bottom as United has reversed course from the disasterous path SMI/J had it on. Dougie continues to try and turn AA into a hybrid LCC/Legacy by jamming in more seats while reducing premium seats in long haul aircraft.
SFO
 
HPAEAA
Posts: 1090
Joined: Mon May 08, 2006 7:24 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:13 pm

N766UA wrote:
DL and UA had strong quarters, in part due to significant increases in bookings of premium seats. AA, on the other hand, has been jamming more seats in and making their airplanes as uncomfortable as possible. I like to think there’s a correlation here that will be a positive for overall passenger comfort going forward.

I can’t figure out what AA is doing with the premium cabins - they keep touting the new premium economy but are trying to charge astromical prices in the J cabin.. I’ve noticed on my long haul trips out of NYC they no longer match UA & DL on J pricing, for NYC HKG their pricing was on par with CX despite having to route via DFW or LAX and about 3 thousand higher than JAL via NRT. Even on NYC - Europe their prices have several thousand higher than British Airways...
1.4mm and counting...
 
tphuang
Posts: 2974
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:18 pm

HPAEAA wrote:
N766UA wrote:
DL and UA had strong quarters, in part due to significant increases in bookings of premium seats. AA, on the other hand, has been jamming more seats in and making their airplanes as uncomfortable as possible. I like to think there’s a correlation here that will be a positive for overall passenger comfort going forward.

I can’t figure out what AA is doing with the premium cabins - they keep touting the new premium economy but are trying to charge astromical prices in the J cabin.. I’ve noticed on my long haul trips out of NYC they no longer match UA & DL on J pricing, for NYC HKG their pricing was on par with CX despite having to route via DFW or LAX and about 3 thousand higher than JAL via NRT. Even on NYC - Europe their prices have several thousand higher than British Airways...


for me it's the other way around. On the direct flights I take out of JFK, they always seem to have lowest J pricing, so I end up flying almost exclusively with them. Other than that, I go with other OW airlines. There is no way I'm going to pay more for additional travel time.
 
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tlecam
Posts: 1397
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Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:20 pm

Prost wrote:
AA has a more modern fleet than DL, yet seem to lean on fuel expenses as the reason for the decreased profit.


I would expect this to come up on the analysts call. They need to have a good answer for this; it speaks to long term performance.
BOS-LGA-JFK | A:319/20/21, 332/3, 346 || B:717, 735, 737, 738, 739, 752, 753, 762, 763, 764, 787, 772, 744 || MD80, MD90
 
HPAEAA
Posts: 1090
Joined: Mon May 08, 2006 7:24 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:22 pm

tphuang wrote:
HPAEAA wrote:
N766UA wrote:
DL and UA had strong quarters, in part due to significant increases in bookings of premium seats. AA, on the other hand, has been jamming more seats in and making their airplanes as uncomfortable as possible. I like to think there’s a correlation here that will be a positive for overall passenger comfort going forward.

I can’t figure out what AA is doing with the premium cabins - they keep touting the new premium economy but are trying to charge astromical prices in the J cabin.. I’ve noticed on my long haul trips out of NYC they no longer match UA & DL on J pricing, for NYC HKG their pricing was on par with CX despite having to route via DFW or LAX and about 3 thousand higher than JAL via NRT. Even on NYC - Europe their prices have several thousand higher than British Airways...


for me it's the other way around. On the direct flights I take out of JFK, they always seem to have lowest J pricing, so I end up flying almost exclusively with them. Other than that, I go with other OW airlines. There is no way I'm going to pay more for additional travel time.

I’m in the same boat- Could be luck of the draw, I was looking at trips involving TLV, LHR & BCN..
1.4mm and counting...
 
usairways787
Posts: 217
Joined: Wed Jun 22, 2005 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:23 pm

Bad management decisions at it's finest. Pointing the finger at absolutely everything else instead directly at the source is the result of what we're seeing.
Making bag smashing great again
 
LupineChemist
Posts: 801
Joined: Wed Oct 07, 2015 9:03 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:25 pm

HPAEAA wrote:
N766UA wrote:
DL and UA had strong quarters, in part due to significant increases in bookings of premium seats. AA, on the other hand, has been jamming more seats in and making their airplanes as uncomfortable as possible. I like to think there’s a correlation here that will be a positive for overall passenger comfort going forward.

I can’t figure out what AA is doing with the premium cabins - they keep touting the new premium economy but are trying to charge astromical prices in the J cabin.. I’ve noticed on my long haul trips out of NYC they no longer match UA & DL on J pricing, for NYC HKG their pricing was on par with CX despite having to route via DFW or LAX and about 3 thousand higher than JAL via NRT. Even on NYC - Europe their prices have several thousand higher than British Airways...


Particularly to LHR, I wouldn't be shocked if there's a lot more premium demand to use AA, particularly from the UK side with the BA FF base. Nicer planes (77W vs 747), nicer terminals (Note even going to bother mentioning T7, but T3 is often a much nicer experience in LHR, too), nicer lounges (save the CCR, but Flagship Lounge in JFK and all the T3 options in LHR including Cathay lounges). Remember that BA and AA coordinate prices and function as a single business TATL.
 
Prost
Posts: 2405
Joined: Wed Oct 03, 2012 6:23 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:46 pm

UpNAWAy wrote:
Prost wrote:
It sounds as though they’ll be deferring some planes and cutting some routes. AA has a more modern fleet than DL, yet seem to lean on fuel expenses as the reason for the decreased profit.

UAL seems to have found a path to better profitability, I hope AA finds their path as well.



Derek Kerr just said no changes for the next three years regarding current aircraft orders. Where does it sound like routes will be getting reduced?


So the article I saw has been taken down. Now I’m not certain it wasn’t an opinion pieces, I accessed the piece via Yahoo finance, but now *poof* it’s gone.
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 1:50 pm

They definitely have a very conservative growth plane but there is zero indications of cuts....
 
chonetsao
Posts: 272
Joined: Sun Nov 06, 2005 3:55 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:00 pm

Remove J seats means remove of pricing power in J cabin sales. Another airline (delta) with more premium seats can dictate the price to a degree to screw AAs high fares game.

Adding Y seats reduced CASM but not overall cost. In fact there is one off cost to install these seats. If these seats remain unsold, it reduces PRASM, while overall cost is the same. If these seats has to be sold at steeper discount, airline gets a lower PRASM. I am not sure what AA management is smoking but I do hope they considered a scenario that the market is over supplied or demand may be severely impacted due to a future downturn.
 
ericm2031
Posts: 1051
Joined: Tue Jun 19, 2012 8:46 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:09 pm

panamair wrote:
The earnings did exceed Wall Street expectations so the stock is trading up pre-market but they do look rather underwhelming compared to their two legacy peers.

Operating Revenues
DL $11.95 billion
AA $11.56 billion
UA $11.0 billion

Operating Profit GAAP
DL $1.64 billion (13.7% margin)
UA $1.20 billion (10.9% margin)
AA $649m (5.6% margin)

Operating Profit excluding specials:
DL $1.63 billion (13.6% margin)
UA $1.22 billion (11.1% margin)
AA $866 million (7.5% margin)

Pre-Tax Income GAAP
DL $1.67 billion (14.0% margin)
UA $1.06 billion (9.6% margin)
AA $456 million (3.9% margin)

Pre-Tax Income excluding specials:
DL $1.60 billion (13.4% margin)
UA $1.06 billion (9.7% margin)
AA $688 million (6.0% margin)

Net Income GAAP
DL $1.3 billion (11.0% margin)
UA $836 million (7.6% margin)
AA $341 million (3.0% margin)

Net Income excluding specials:
DL $1.24 billion (10.3% margin)
UA $837million (7.6% margin)
AA $523 million (4.5% margin)


Can you add in the WN numbers on here or the WN earnings thread just for comparison?
 
TWFlyGuy
Posts: 394
Joined: Mon Apr 17, 2017 5:10 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:11 pm

tlecam wrote:
Prost wrote:
AA has a more modern fleet than DL, yet seem to lean on fuel expenses as the reason for the decreased profit.


I would expect this to come up on the analysts call. They need to have a good answer for this; it speaks to long term performance.


I imagine there will be a lot of questions they need good answers for but won't have. I said this in a previous thread but this is the problem Doug is going to face sooner rather than later. Investors will put up with some "pain" (poor performance) if you can show a plan. Something that says the reason we're not hitting the marks of our peers is this but we are doing X/Y/Z to get there and I just haven't heard that from Doug.
 
ScottB
Posts: 6591
Joined: Fri Jul 28, 2000 1:25 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:12 pm

MIflyer12 wrote:
About 1/2 what Delta made, or about what Southwest made on 1/2 the revenue.


They didn't even get to what LUV made on less than half the revenue. AAL operating income was $649 MM vs. $796 MM at LUV. Net income of $341 MM against $615 MM at LUV. What's really disconcerting is the CASM increase of 9.4%; LUV's went up 3.1%. CASM was over 3 cents higher than LUV in the quarter but RASM was a bit less than 2 cents higher.
 
ScottB
Posts: 6591
Joined: Fri Jul 28, 2000 1:25 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:24 pm

ericm2031 wrote:
panamair wrote:
The earnings did exceed Wall Street expectations so the stock is trading up pre-market but they do look rather underwhelming compared to their two legacy peers.

Operating Revenues
DL $11.95 billion
AA $11.56 billion
UA $11.0 billion
WN $5.6 billion

Operating Profit GAAP
DL $1.64 billion (13.7% margin)
UA $1.20 billion (10.9% margin)
AA $649 million (5.6% margin)
WN $798 million (14.3% margin)

Operating Profit excluding specials:
DL $1.63 billion (13.6% margin)
UA $1.22 billion (11.1% margin)
AA $866 million (7.5% margin)
WN $796 million (14.3% margin)

Pre-Tax Income GAAP
DL $1.67 billion (14.0% margin)
UA $1.06 billion (9.6% margin)
AA $456 million (3.9% margin)
WN $786 million (14.1% margin)

Pre-Tax Income excluding specials:
DL $1.60 billion (13.4% margin)
UA $1.06 billion (9.7% margin)
AA $688 million (6.0% margin)
WN $784 million (14.1% margin)

Net Income GAAP
DL $1.3 billion (11.0% margin)
UA $836 million (7.6% margin)
AA $341 million (3.0% margin)
WN $615 million (11.0% margin)

Net Income excluding specials:
DL $1.24 billion (10.3% margin)
UA $837million (7.6% margin)
AA $523 million (4.5% margin)
WN $614 million (11.0% margin)


Can you add in the WN numbers on here or the WN earnings thread just for comparison?


There you go
 
FriscoHeavy
Posts: 1543
Joined: Tue May 27, 2014 4:31 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:39 pm

Simply put, AA needs to get debt under control. That is the kryptonite of every person or company and while you may be able to get away with it for a little while while things are good, but as long as you have debt, you will always be susceptible to being bitten in the ass. It only works while it works and new planes with a huge balance, don't outperform older, paid for planes.

If you play with a snake (debt in this case) long enough, you will get bitten.
Whatever
 
ericm2031
Posts: 1051
Joined: Tue Jun 19, 2012 8:46 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:42 pm

ScottB wrote:
ericm2031 wrote:
panamair wrote:
The earnings did exceed Wall Street expectations so the stock is trading up pre-market but they do look rather underwhelming compared to their two legacy peers.

Operating Revenues
DL $11.95 billion
AA $11.56 billion
UA $11.0 billion
WN $5.6 billion

Operating Profit GAAP
DL $1.64 billion (13.7% margin)
UA $1.20 billion (10.9% margin)
AA $649 million (5.6% margin)
WN $798 million (14.3% margin)

Operating Profit excluding specials:
DL $1.63 billion (13.6% margin)
UA $1.22 billion (11.1% margin)
AA $866 million (7.5% margin)
WN $796 million (14.3% margin)

Pre-Tax Income GAAP
DL $1.67 billion (14.0% margin)
UA $1.06 billion (9.6% margin)
AA $456 million (3.9% margin)
WN $786 million (14.1% margin)

Pre-Tax Income excluding specials:
DL $1.60 billion (13.4% margin)
UA $1.06 billion (9.7% margin)
AA $688 million (6.0% margin)
WN $784 million (14.1% margin)

Net Income GAAP
DL $1.3 billion (11.0% margin)
UA $836 million (7.6% margin)
AA $341 million (3.0% margin)
WN $615 million (11.0% margin)

Net Income excluding specials:
DL $1.24 billion (10.3% margin)
UA $837million (7.6% margin)
AA $523 million (4.5% margin)
WN $614 million (11.0% margin)


Can you add in the WN numbers on here or the WN earnings thread just for comparison?


There you go


Wow, thanks.
 
codc10
Posts: 2501
Joined: Sat Jul 08, 2000 7:18 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:45 pm

AA touting "lowest in the industry" capacity growth. Also noting that they would be "aggressive" in repurchasing shares at current valuation, but won't compromise their target of $7B cash on hand.

This call sounds like UA in the Smisek and early Munoz eras. Storm clouds brewing... plenty of merger-related upside here, but no doubt Parker & Co. are going to come under fire from the analyst community as Delta continues its trajectory and United pulls out of its industry laggard position and is booking results ahead of AA.
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:51 pm

flyguy84 wrote:
AA continues the race to the bottom as United has reversed course from the disasterous path SMI/J had it on. Dougie continues to try and turn AA into a hybrid LCC/Legacy by jamming in more seats while reducing premium seats in long haul aircraft.



Do you folks just make stuff up on purpose? The only J reduction was the very small Low Density B777-200 fleet that was reconfigured to match the rest for efficiency purposes.
They have reduced Y seats not increased them in the wide-body's as they add Premium Economy. The only fleets getting a Y increase is the legacy AA B737 and A320 family aircraft being matched to the legacy LUS aircraft. The also are getting Premium Economy which raise revenue as well as the Basic Economy product both are increasing revenue and will be rolled out on all the Domestic fleets over the next year.
 
TWFlyGuy
Posts: 394
Joined: Mon Apr 17, 2017 5:10 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:52 pm

codc10 wrote:
AA touting "lowest in the industry" capacity growth. Also noting that they would be "aggressive" in repurchasing shares at current valuation, but won't compromise their target of $7B cash on hand.

This call sounds like UA in the Smisek and early Munoz eras. Storm clouds brewing... plenty of merger-related upside here, but no doubt Parker & Co. are going to come under fire from the analyst community as Delta continues its trajectory and United pulls out of its industry laggard position and is booking results ahead of AA.


And if you recall, UA shares under Smisek didn't do too poorly if I recall correctly because they would say those magic words "share repurchase". In other words "We have no real plan here so to make you happy, we're going to artificially inflate share prices through a repurchase program".
 
LHUSA
Posts: 757
Joined: Wed Aug 24, 2005 10:15 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:52 pm

UpNAWAy wrote:
flyguy84 wrote:
AA continues the race to the bottom as United has reversed course from the disasterous path SMI/J had it on. Dougie continues to try and turn AA into a hybrid LCC/Legacy by jamming in more seats while reducing premium seats in long haul aircraft.



Do you folks just make stuff up on purpose? The only J reduction was the very small Low Density B777-200 fleet that was reconfigured to match the rest for efficiency purposes.
They have reduced Y seats not increased them in the wide-body's as they add Premium Economy. The only fleets getting a Y increase is the legacy AA B737 and A320 family aircraft being matched to the legacy LUS aircraft. The also are getting Premium Economy which raise revenue as well as the Basic Economy product both are increasing revenue and will be rolled out on all the Domestic fleets over the next year.


I believe J in the 788s is being reduced to something like 20 seats, no?
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:54 pm

FriscoHeavy wrote:
Simply put, AA needs to get debt under control. That is the kryptonite of every person or company and while you may be able to get away with it for a little while while things are good, but as long as you have debt, you will always be susceptible to being bitten in the ass. It only works while it works and new planes with a huge balance, don't outperform older, paid for planes.

If you play with a snake (debt in this case) long enough, you will get bitten.



Parker specifically said they are paying debt down as its due and not replacing it, but they are not replacing it early as the terms are too favorable.
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 2:57 pm

LHUSA wrote:
UpNAWAy wrote:
flyguy84 wrote:
AA continues the race to the bottom as United has reversed course from the disasterous path SMI/J had it on. Dougie continues to try and turn AA into a hybrid LCC/Legacy by jamming in more seats while reducing premium seats in long haul aircraft.



Do you folks just make stuff up on purpose? The only J reduction was the very small Low Density B777-200 fleet that was reconfigured to match the rest for efficiency purposes.
They have reduced Y seats not increased them in the wide-body's as they add Premium Economy. The only fleets getting a Y increase is the legacy AA B737 and A320 family aircraft being matched to the legacy LUS aircraft. The also are getting Premium Economy which raise revenue as well as the Basic Economy product both are increasing revenue and will be rolled out on all the Domestic fleets over the next year.


I believe J in the 788s is being reduced to something like 20 seats, no?


The Post Premium Economy configuration is 37J, 24 PE, 212Y

Also in addition the A321NEOs which start arriving next year are going to have 20 instead of 16.
 
User avatar
LAXintl
Posts: 23620
Joined: Wed May 24, 2000 12:12 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 3:13 pm

The market likes the results - AAL up +6.6%.as of 1100am eastern.

In comparison SWA who also reported today down -6.2%.
From the desert to the sea, to all of Southern California
 
LHUSA
Posts: 757
Joined: Wed Aug 24, 2005 10:15 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 3:14 pm

UpNAWAy wrote:
LHUSA wrote:
UpNAWAy wrote:


Do you folks just make stuff up on purpose? The only J reduction was the very small Low Density B777-200 fleet that was reconfigured to match the rest for efficiency purposes.
They have reduced Y seats not increased them in the wide-body's as they add Premium Economy. The only fleets getting a Y increase is the legacy AA B737 and A320 family aircraft being matched to the legacy LUS aircraft. The also are getting Premium Economy which raise revenue as well as the Basic Economy product both are increasing revenue and will be rolled out on all the Domestic fleets over the next year.


I believe J in the 788s is being reduced to something like 20 seats, no?


The Post Premium Economy configuration is 37J, 24 PE, 212Y

Also in addition the A321NEOs which start arriving next year are going to have 20 instead of 16.


I think you're talking about the 789s?

I'm not sure if this is accurate, but per this article, AA is indeed reducing J in the 788s to only 20 seats.

https://thepointsguy.com/news/aa-reduci ... -retrofit/
 
UpNAWAy
Posts: 498
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 3:23 pm

That is right I forgot about the B787-8s, they are going to be 20J, 28PE, 186Y. So in that fleet the PE room is coming from both J & Y. So in that fleet you will have 48 Premium seats (20J+28PE)) and Y is 186 down from 198. The B787-9 are remaining at their current config which is 30J, 21PE, 234Y.

But they overall theme posted here so often is that they are devaluing the high end and going after more low in is absolutely false. They are fragmenting the cabin to increase RASM not reduce it.
 
MSPNWA
Posts: 3289
Joined: Thu Apr 23, 2009 2:48 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 3:33 pm

It's not hard to see the largest piece of their revenue issue - they need more butts in the seats. Their load factor is lagging behind UA and DL - about 82% versus 86%. That's about $500 million in revenue assuming equal yield. And with minimal cost associated with those extra passengers, that's the majority of their gap with UA.

Why that is is puzzling. With hub fortress hubs in CLT and DFW, you'd think load factors would be high. My guess is that they have an issue with their revenue management more than anything. They're not getting the passengers or revenue they should be getting.


FriscoHeavy wrote:
Simply put, AA needs to get debt under control. That is the kryptonite of every person or company and while you may be able to get away with it for a little while while things are good, but as long as you have debt, you will always be susceptible to being bitten in the ass. It only works while it works and new planes with a huge balance, don't outperform older, paid for planes.

If you play with a snake (debt in this case) long enough, you will get bitten.


Their debt is likely positive for their earnings, not a negative, as that debt is there because of a newer, more efficient fleet. I'd hate to know how bad off AA would be without that debt as they slog around with inefficient gas guzzlers.
 
FriscoHeavy
Posts: 1543
Joined: Tue May 27, 2014 4:31 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 3:54 pm

MSPNWA wrote:
It's not hard to see the largest piece of their revenue issue - they need more butts in the seats. Their load factor is lagging behind UA and DL - about 82% versus 86%. That's about $500 million in revenue assuming equal yield. And with minimal cost associated with those extra passengers, that's the majority of their gap with UA.

Why that is is puzzling. With hub fortress hubs in CLT and DFW, you'd think load factors would be high. My guess is that they have an issue with their revenue management more than anything. They're not getting the passengers or revenue they should be getting.


FriscoHeavy wrote:
Simply put, AA needs to get debt under control. That is the kryptonite of every person or company and while you may be able to get away with it for a little while while things are good, but as long as you have debt, you will always be susceptible to being bitten in the ass. It only works while it works and new planes with a huge balance, don't outperform older, paid for planes.

If you play with a snake (debt in this case) long enough, you will get bitten.


Their debt is likely positive for their earnings, not a negative, as that debt is there because of a newer, more efficient fleet. I'd hate to know how bad off AA would be without that debt as they slog around with inefficient gas guzzlers.


No, it's not a 'positive' for their earnings. Yes, it may seem as such for a while, but at some point, S*** hits the fan and it's a very bad thing. 'Gas Guzzler' is very relative. There is no way that having big payments on new planes is cheaper than paid for 10-15 year old planes. I'm not talking about keeping a 30 year old plane around. You come out so much further ahead with less debt. There is less risk, you are more nimble and those without or less debt are going to be in a much strong financial position. Those drowning in debt are always playing defense and at the mercy of the next economic cycle, increase in fuel prices, etc.

Let's be clear, the 4% difference of butts-in-seats isn't their problem. Well, it wouldn't be if they didn't have all that debt.

Look, I want AA to succeed and do very well. I fly them almost exclusively, but debt will eventually deal a crushing blow.
Whatever
 
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lightsaber
Moderator
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Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:05 pm

ScottB wrote:
ericm2031 wrote:
panamair wrote:
The earnings did exceed Wall Street expectations so the stock is trading up pre-market but they do look rather underwhelming compared to their two legacy peers.

Operating Revenues
DL $11.95 billion
AA $11.56 billion
UA $11.0 billion
WN $5.6 billion

Operating Profit GAAP
DL $1.64 billion (13.7% margin)
UA $1.20 billion (10.9% margin)
AA $649 million (5.6% margin)
WN $798 million (14.3% margin)

Operating Profit excluding specials:
DL $1.63 billion (13.6% margin)
UA $1.22 billion (11.1% margin)
AA $866 million (7.5% margin)
WN $796 million (14.3% margin)

Pre-Tax Income GAAP
DL $1.67 billion (14.0% margin)
UA $1.06 billion (9.6% margin)
AA $456 million (3.9% margin)
WN $786 million (14.1% margin)

Pre-Tax Income excluding specials:
DL $1.60 billion (13.4% margin)
UA $1.06 billion (9.7% margin)
AA $688 million (6.0% margin)
WN $784 million (14.1% margin)

Net Income GAAP
DL $1.3 billion (11.0% margin)
UA $836 million (7.6% margin)
AA $341 million (3.0% margin)
WN $615 million (11.0% margin)

Net Income excluding specials:
DL $1.24 billion (10.3% margin)
UA $837million (7.6% margin)
AA $523 million (4.5% margin)
WN $614 million (11.0% margin)


Can you add in the WN numbers on here or the WN earnings thread just for comparison?


There you go

Summary:

DL and WN 11% margins, DL just about twice the size of WN.

UA is in a middle ground of 7.6%, trying to recover.

AA at 3% has some explaining to do.

In a downturn margins quickly drop 5% to 12%.
WN and DL could adjust.
UA would have a more painful adaptation.
AA would sink.

With such a young/modern fleet, what will change?

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
ripcordd
Posts: 1077
Joined: Sat Apr 01, 2000 1:12 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:08 pm

They are turning this into 2 Airlines one they will take care of the most valued flyers 5-10% maybe and then the other 90% treat them like ryan....Look at DL expanding seatback TV's, staying 9 across on 777. It's time for the Dougie show to go.....Instead of buying back shares they should have paid debt down but since the elite upper management are rewarded with stock options they missed the bigger picture. The other thing is they slowed 787 where I think they should have sped up and then sped up the 767 retirement and the 330-200 and 300's simplify the fleet save money....
 
LHUSA
Posts: 757
Joined: Wed Aug 24, 2005 10:15 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:13 pm

As noted, the market is responding well, up 8% ATM. What's the rationale behind this, considering it's a pretty gloomy tone on this thread?
 
panamair
Posts: 4086
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Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:22 pm

LHUSA wrote:
As noted, the market is responding well, up 8% ATM. What's the rationale behind this, considering it's a pretty gloomy tone on this thread?


They beat expectations and are also projecting strong unit revenue increases for Q4.
 
Airbuser
Posts: 13
Joined: Mon Sep 03, 2018 1:42 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:23 pm

AA had a positive outlook and Southwest was negative regarding forwood looking. Stock has been beaten down so people may see opportunities. Perhaps someone is getting axed and wall street knows it.

Operationally AA is not doing well. They keep blaming the weather. For some unknown reason United, Delta, and Southwest don’t have weather issues. Give me a break.
 
Sightseer
Posts: 927
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Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:27 pm

LHUSA wrote:
As noted, the market is responding well, up 8% ATM. What's the rationale behind this, considering it's a pretty gloomy tone on this thread?


I'm guessing a combo of earnings beating expectations and the prospect of share buybacks.
 
MSPNWA
Posts: 3289
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Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:33 pm

FriscoHeavy wrote:
No, it's not a 'positive' for their earnings. Yes, it may seem as such for a while, but at some point, S*** hits the fan and it's a very bad thing. 'Gas Guzzler' is very relative. There is no way that having big payments on new planes is cheaper than paid for 10-15 year old planes. I'm not talking about keeping a 30 year old plane around. You come out so much further ahead with less debt. There is less risk, you are more nimble and those without or less debt are going to be in a much strong financial position. Those drowning in debt are always playing defense and at the mercy of the next economic cycle, increase in fuel prices, etc.

Let's be clear, the 4% difference of butts-in-seats isn't their problem. Well, it wouldn't be if they didn't have all that debt.

Look, I want AA to succeed and do very well. I fly them almost exclusively, but debt will eventually deal a crushing blow.


AA's current issue is the revenue side. A higher-cost, lower-debt fleet does not help the revenue equation. In fact it will likely make it worse. The only solution when things turn red is to shrink, and that's the downward spiral with no end. A more efficient fleet swings the operating profit line in the right direction, and that's what AA needs to work through the revenue problem.

AA's debt comes at the advantage of lower costs in the short-run and lower capital expenditures in the long-run. It's not automatically a disadvantage. It's quite possibly an advantage. I'd recommend avoiding the simplistic view of "debt is bad".
 
FriscoHeavy
Posts: 1543
Joined: Tue May 27, 2014 4:31 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:41 pm

MSPNWA wrote:
FriscoHeavy wrote:
No, it's not a 'positive' for their earnings. Yes, it may seem as such for a while, but at some point, S*** hits the fan and it's a very bad thing. 'Gas Guzzler' is very relative. There is no way that having big payments on new planes is cheaper than paid for 10-15 year old planes. I'm not talking about keeping a 30 year old plane around. You come out so much further ahead with less debt. There is less risk, you are more nimble and those without or less debt are going to be in a much strong financial position. Those drowning in debt are always playing defense and at the mercy of the next economic cycle, increase in fuel prices, etc.

Let's be clear, the 4% difference of butts-in-seats isn't their problem. Well, it wouldn't be if they didn't have all that debt.

Look, I want AA to succeed and do very well. I fly them almost exclusively, but debt will eventually deal a crushing blow.


AA's current issue is the revenue side. A higher-cost, lower-debt fleet does not help the revenue equation. In fact it will likely make it worse. The only solution when things turn red is to shrink, and that's the downward spiral with no end. A more efficient fleet swings the operating profit line in the right direction, and that's what AA needs to work through the revenue problem.

AA's debt comes at the advantage of lower costs in the short-run and lower capital expenditures in the long-run. It's not automatically a disadvantage. It's quite possibly an advantage. I'd recommend avoiding the simplistic view of "debt is bad".


It's not a simplistic view. Debt is not a 'good' thing, no matter how you spin. Yes, it will work for a while and in good times, works well. You don't have to have as much revenue to do well when you aren't playing kissy-face with the banks and paying them HUGE sums of money every month. At ~$225 Million in interest alone this quarter, that's a Billion dollars a year up in smoke. That covers a lot of butts in seats.

You go leverage yourself to death and see how that works out when you lose your job, can't get a new one, interest rates go up, you have a health issue and can't work, etc. There is a huge element of risk carrying debt like this and you can't see that by just looking at the numbers on the surface. Meanwhile, myself and companies and don't carry that debt (risk), will do remarkably well in difficult times.
Whatever
 
chonetsao
Posts: 272
Joined: Sun Nov 06, 2005 3:55 pm

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:45 pm

UpNAWAy wrote:
That is right I forgot about the B787-8s, they are going to be 20J, 28PE, 186Y. So in that fleet the PE room is coming from both J & Y. So in that fleet you will have 48 Premium seats (20J+28PE)) and Y is 186 down from 198. The B787-9 are remaining at their current config which is 30J, 21PE, 234Y.

But they overall theme posted here so often is that they are devaluing the high end and going after more low in is absolutely false. They are fragmenting the cabin to increase RASM not reduce it.


I am so glad that you are so positive. But to many people, PE is essentially a premier Y seat. Your accounting is flawed. You should only count F and J as premium seats. You count PE and Y as Y. There is a huge expectation and price gap between F/J and PE. And that is why companies like BA set their PE price based on Y fares.
 
airtran737
Posts: 3414
Joined: Mon Apr 05, 2004 3:47 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 4:50 pm

Should we start a pool on when AAG files for bankruptcy again?
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
 
HPAEAA
Posts: 1090
Joined: Mon May 08, 2006 7:24 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 5:19 pm

UpNAWAy wrote:
That is right I forgot about the B787-8s, they are going to be 20J, 28PE, 186Y. So in that fleet the PE room is coming from both J & Y. So in that fleet you will have 48 Premium seats (20J+28PE)) and Y is 186 down from 198. The B787-9 are remaining at their current config which is 30J, 21PE, 234Y.

But they overall theme posted here so often is that they are devaluing the high end and going after more low in is absolutely false. They are fragmenting the cabin to increase RASM not reduce it.


So a couple of observations:
1. DL and UA are also adding premium economy but not reducing the J cabin during the modifications. It's interesting to me that AA sees this as a need to bifurcate their Premium offerings to hit multiple price point rather than a further differentiation of the Y cabin as other carriers do.
2. On many of the 787 routes these were previously flown by 772s in TPAC & 767s on TATL, in the case of TPAC, the J cabin has been reduced from over 40 seats to 20 (following the PE introduction) which is a pretty big cut and from 28 to 20 on the 763 route TATL, now the current management didn't set the original configurations however they did decide to reduce the cabin further form 28 to 20 with the introduction of Premium economy (~ a 30% further cut). This coupled with a lot of the domestic reductions in first class (AA 752s had 24 First seats while the A321 has 16, the MD80s had 16 F while the 319s have 8) & you have to wonder how much emphasis AA will be placing on premium flying going forward...

Does anyone know a source for Premium vs Coach ASMs? I'd be interested to see the over all breakdown over time...
1.4mm and counting...
 
ScottB
Posts: 6591
Joined: Fri Jul 28, 2000 1:25 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 5:56 pm

UpNAWAy wrote:
The only fleets getting a Y increase is the legacy AA B737 and A320 family aircraft being matched to the legacy LUS aircraft.


And this represents the vast majority of the company's domestic fleet! Not to mention that the LAA A319s already had a reputation for being ridiculously tight and the 737MAX fleet is widely reviled for its sub-Ryanair seat pitch and teeny lavatories.
 
Etheereal
Posts: 320
Joined: Tue Nov 29, 2016 11:44 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 6:11 pm

Two important quesitons: Did they lose money again? Am i still able to claim my free Wine from Doug?
JetBuddy wrote:
"737 slides off the runway" is the new "Florida man"..

:lol:
 
dfdubflyer
Posts: 129
Joined: Mon Oct 15, 2012 4:01 am

Re: AA post Q3 2018 earnings

Thu Oct 25, 2018 6:51 pm

Everyone step back from the brink on dire predictions about basic economy and debt.

You can chalk almost all of this up to Parker and Kerr refusing to hedge fuel. They had a bad experience at America West over a decade ago and when spot prices were low three years ago they looked like geniuses (while Southwest was left paying $25 more a gallon or billions to unwind bad hedges). Now, when spot prices have risen back up and they have no hedges to protect their they’re far more exposed than Delta, United or Southwest.

Add back the change in fuel they left themselves exposed to, and they’re solidly middle of the pack with a comparable margin to the other two.

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