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Ishrion
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AA Reports Q3 Results

Thu Oct 24, 2019 12:36 pm

http://news.aa.com/news/news-details/20 ... fault.aspx

Reported third-quarter 2019 pre-tax income of $557 million and net income of $425 million. Excluding net special items, both pre-tax income and net income rose more than 15% year over year to $835 million and $630 million,1 respectively.
Third-quarter earnings were $0.96 per diluted share. Excluding net special items, earnings per share grew 20% year over year to $1.42 per diluted share1.
Reported record third-quarter revenue of $11.9 billion. Also reported third-quarter total revenue per available seat mile (TRASM) of 15.71 cents, an increase of 2% year over year. This marks the 12th consecutive quarter of TRASM growth.
Returned $244 million to shareholders in the form of dividends and share repurchases in the third quarter.


Nice to see these despite the MAX groundings.
 
N757ST
Posts: 1061
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Re: AA Reports Q3 Results

Thu Oct 24, 2019 12:55 pm

285 million a quarter to service their debt load.

Also, operating income was effected 500million by the 34 grounded 737s?!??

Suuuuuuuuuure.
 
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gdg9
Posts: 1025
Joined: Thu Jun 30, 2005 9:42 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 1:14 pm

N757ST wrote:
285 million a quarter to service their debt load.

Also, operating income was effected 500million by the 34 grounded 737s?!??

Suuuuuuuuuure.


Interesting, as Southwest stated they suffered an "estimated $210 million reduction in operating income due to the continued grounding of the Boeing 737 MAX 8 aircraft (MAX)."
@dfwtower
 
9w748capt
Posts: 1771
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Re: AA Reports Q3 Results

Thu Oct 24, 2019 1:22 pm

Curious how these numbers compare to DL and UA, particularly TRASM. AA's issue isn't filling seats, it's their insistence on winning the race to the bottom. Yay good job AA, now customers know you're not better than Spirit or Frontier and will only pay to fly AA accordingly. Bravo.
 
Ishrion
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Re: AA Reports Q3 Results

Thu Oct 24, 2019 2:44 pm

https://viewfromthewing.com/seven-thing ... ardingArea

- Robert Isom confident they’ll attract partners in the South American region.
- 5% planned growth for 2020, 1/3 of it comes from the return of the MAX.
- Chicago was “the best performing hub for unit revenue” in the third quarter
- Project Oasis 737s completed by Summer 2021.... :(
 
9w748capt
Posts: 1771
Joined: Sat Feb 02, 2008 10:27 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 3:44 pm

Ishrion wrote:
https://viewfromthewing.com/seven-things-i-learned-from-the-american-airlines-third-quarter-earnings-call/?utm_source=BoardingArea&utm_medium=BoardingArea

- Robert Isom confident they’ll attract partners in the South American region.
- 5% planned growth for 2020, 1/3 of it comes from the return of the MAX.
- Chicago was “the best performing hub for unit revenue” in the third quarter
- Project Oasis 737s completed by Summer 2021.... :(


What an utter joke. Oasis needs to go, along with the entirety of this management team. AA is a disgrace.
 
Miamiairport
Posts: 828
Joined: Tue Apr 10, 2018 8:14 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 4:11 pm

The Oasis for Y going forward is no surprise. However, I thought AA was re-considering Oasis for the F cabin but that seems going forward.
 
Brickell305
Posts: 1236
Joined: Sat Jun 24, 2017 2:07 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 4:28 pm

Ishrion wrote:
https://viewfromthewing.com/seven-things-i-learned-from-the-american-airlines-third-quarter-earnings-call/?utm_source=BoardingArea&utm_medium=BoardingArea

- Robert Isom confident they’ll attract partners in the South American region.
- 5% planned growth for 2020, 1/3 of it comes from the return of the MAX.
- Chicago was “the best performing hub for unit revenue” in the third quarter
- Project Oasis 737s completed by Summer 2021.... :(

AA lost money flying passengers in Q3. Yikes.
 
jumbojet
Posts: 2957
Joined: Mon Dec 29, 2003 3:01 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 4:53 pm

Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.
 
Brickell305
Posts: 1236
Joined: Sat Jun 24, 2017 2:07 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 5:14 pm

jumbojet wrote:
Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.
 
alasizon
Posts: 2716
Joined: Sat Apr 28, 2007 8:57 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 5:41 pm

Brickell305 wrote:
jumbojet wrote:
Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


Those numbers don't even match what was reported in AA's own release.

Pax Revenue was was 10.995 billion
Cargo Revenue was 208 million

Total Operating Expenses were 11.103 billion. Yes,that does show they only made 100 million but I have a feeling that some of the operating expenses also include servicing the AAdvantage program so actual pax+cargo income was probably around 250-300 million.
Airport (noun) - A construction site which airplanes tend to frequent
 
jumbojet
Posts: 2957
Joined: Mon Dec 29, 2003 3:01 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 6:09 pm

Brickell305 wrote:
jumbojet wrote:
Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.



wow, truly incredible. Thanks for posting that,
 
User avatar
Miami
Posts: 6203
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Re: AA Reports Q3 Results

Thu Oct 24, 2019 6:14 pm

Again, Doug Parker needs to go.
Aviation is proof that given, the will, we have the capacity to achieve the impossible. - Eddie Rickenbacker
 
OneX123
Posts: 78
Joined: Tue Jan 03, 2017 1:08 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 6:27 pm

9w748capt wrote:
Ishrion wrote:
https://viewfromthewing.com/seven-things-i-learned-from-the-american-airlines-third-quarter-earnings-call/?utm_source=BoardingArea&utm_medium=BoardingArea

- Robert Isom confident they’ll attract partners in the South American region.
- 5% planned growth for 2020, 1/3 of it comes from the return of the MAX.
- Chicago was “the best performing hub for unit revenue” in the third quarter
- Project Oasis 737s completed by Summer 2021.... :(


What an utter joke. Oasis needs to go, along with the entirety of this management team. AA is a disgrace.


I fly with AA weekly and hold status with the airline. I've always defended its onboard product. I flew on my first oasis 737 Monday (albeit in the emergency row window. Personally, I don't mind having no IFE. 1. I really value the extra space provided by not having the box under the seat in front of you and 2. I prefer watching live tv which on AA is on your phone anyway.

With that being said, the first class was a joke. No IFE and just a cheap-looking layout overall. I was amazed at how tight it was in the front row. The aisle seemed to reduce in size by half and the left-hand aisle seat (1C?) seemed to be directly in the aisle. It was disappointing to see.
 
Etheereal
Posts: 374
Joined: Tue Nov 29, 2016 11:44 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 7:49 pm

Arent AA pilots on average compensated more precisely because they're so subjected to IRROPS, and as such, they need to get "bribed" (aka convinced) to fly?
 
musman9853
Posts: 961
Joined: Mon May 14, 2018 12:30 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 8:45 pm

OneX123 wrote:
9w748capt wrote:
Ishrion wrote:
https://viewfromthewing.com/seven-things-i-learned-from-the-american-airlines-third-quarter-earnings-call/?utm_source=BoardingArea&utm_medium=BoardingArea

- Robert Isom confident they’ll attract partners in the South American region.
- 5% planned growth for 2020, 1/3 of it comes from the return of the MAX.
- Chicago was “the best performing hub for unit revenue” in the third quarter
- Project Oasis 737s completed by Summer 2021.... :(


What an utter joke. Oasis needs to go, along with the entirety of this management team. AA is a disgrace.


I fly with AA weekly and hold status with the airline. I've always defended its onboard product. I flew on my first oasis 737 Monday (albeit in the emergency row window. Personally, I don't mind having no IFE. 1. I really value the extra space provided by not having the box under the seat in front of you and 2. I prefer watching live tv which on AA is on your phone anyway.

With that being said, the first class was a joke. No IFE and just a cheap-looking layout overall. I was amazed at how tight it was in the front row. The aisle seemed to reduce in size by half and the left-hand aisle seat (1C?) seemed to be directly in the aisle. It was disappointing to see.


really? i've flown oasis y and j and both seem perfectly acceptable to me. the j is certainly better than what the europeans offer.
Welcome to the City Beautiful.
 
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OA412
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Re: AA Reports Q3 Results

Thu Oct 24, 2019 8:48 pm

This thread is about AAs Q3 earnings. Please don't turn this into an AA v. DL thread. Thank you!
Hughes Airwest - Top Banana In The West
 
9w748capt
Posts: 1771
Joined: Sat Feb 02, 2008 10:27 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 8:53 pm

musman9853 wrote:
OneX123 wrote:
9w748capt wrote:

What an utter joke. Oasis needs to go, along with the entirety of this management team. AA is a disgrace.


I fly with AA weekly and hold status with the airline. I've always defended its onboard product. I flew on my first oasis 737 Monday (albeit in the emergency row window. Personally, I don't mind having no IFE. 1. I really value the extra space provided by not having the box under the seat in front of you and 2. I prefer watching live tv which on AA is on your phone anyway.

With that being said, the first class was a joke. No IFE and just a cheap-looking layout overall. I was amazed at how tight it was in the front row. The aisle seemed to reduce in size by half and the left-hand aisle seat (1C?) seemed to be directly in the aisle. It was disappointing to see.


really? i've flown oasis y and j and both seem perfectly acceptable to me. the j is certainly better than what the europeans offer.


Hahahha so now that's the standard? Well at least AA's domestic product isn't as horrible as BA's!

And if you liked the Y Oasis product, you must have the lowest expectations of anyone on this board.
 
winginit
Posts: 3067
Joined: Sat Feb 23, 2013 9:23 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 9:08 pm

alasizon wrote:
Brickell305 wrote:
jumbojet wrote:

Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


Those numbers don't even match what was reported in AA's own release.

Pax Revenue was was 10.995 billion
Cargo Revenue was 208 million

Total Operating Expenses were 11.103 billion. Yes,that does show they only made 100 million but I have a feeling that some of the operating expenses also include servicing the AAdvantage program so actual pax+cargo income was probably around 250-300 million.


This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.
 
Phoenix757767
Posts: 319
Joined: Thu Aug 22, 2019 11:32 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 9:50 pm

N757ST wrote:
285 million a quarter to service their debt load.

Also, operating income was effected 500million by the 34 grounded 737s?!??

Suuuuuuuuuure.

The conference call stated the Max impact was only $140 million.
 
SESGDL
Posts: 2925
Joined: Sat Jan 13, 2001 6:25 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 9:57 pm

Have all major US carriers now reported results? Anyone want to take a stab at compiling a list of all of them? I would but am not super well versed in the differences? Where does AA stack up against its peers as well as the LCCs? For those in the know, is this a sign of things improving for AA or is this a greater sign of turmoil to come?

Jeremy
 
alasizon
Posts: 2716
Joined: Sat Apr 28, 2007 8:57 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 10:01 pm

Phoenix757767 wrote:
N757ST wrote:
285 million a quarter to service their debt load.

Also, operating income was effected 500million by the 34 grounded 737s?!??

Suuuuuuuuuure.

The conference call stated the Max impact was only $140 million.


140 million for the quarter, 540 million for year to date.
Airport (noun) - A construction site which airplanes tend to frequent
 
aerohottie
Posts: 828
Joined: Mon Mar 29, 2004 3:52 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 10:19 pm

winginit wrote:
alasizon wrote:
Brickell305 wrote:

Yes it does. From the article:



They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


Those numbers don't even match what was reported in AA's own release.

Pax Revenue was was 10.995 billion
Cargo Revenue was 208 million

Total Operating Expenses were 11.103 billion. Yes,that does show they only made 100 million but I have a feeling that some of the operating expenses also include servicing the AAdvantage program so actual pax+cargo income was probably around 250-300 million.


This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.

Agree. This really shows that AA has some deep structural problems with their business
What?
 
aerohottie
Posts: 828
Joined: Mon Mar 29, 2004 3:52 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 10:20 pm

winginit wrote:
alasizon wrote:
Brickell305 wrote:

Yes it does. From the article:



They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


Those numbers don't even match what was reported in AA's own release.

Pax Revenue was was 10.995 billion
Cargo Revenue was 208 million

Total Operating Expenses were 11.103 billion. Yes,that does show they only made 100 million but I have a feeling that some of the operating expenses also include servicing the AAdvantage program so actual pax+cargo income was probably around 250-300 million.


This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.

Agree. This really shows that AA has some deep structural problems with their business
What?
 
ethernal
Posts: 463
Joined: Mon May 06, 2019 12:09 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 10:25 pm

SESGDL wrote:
Have all major US carriers now reported results? Anyone want to take a stab at compiling a list of all of them? I would but am not super well versed in the differences? Where does AA stack up against its peers as well as the LCCs? For those in the know, is this a sign of things improving for AA or is this a greater sign of turmoil to come?

Jeremy


The short summary is that AA lags significantly in operating and net income margins relative to all of its peers. United earned a 9.7% net income margin*, Delta 13.1%, and Southwest 12.6%. Alaska, jetBlue, and Spirit also all significantly exceeded AA's margins.

* many folks would say operating income is a better proxy for performance but AA underperforms both and I prefer true bottom line unless there are truly unusual events (operating income is too easy to game by creating one-time expenses that are really recurring expenses and I believe decisions about capital structure matter just as much as operational performance).
 
MIflyer12
Posts: 9008
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA Reports Q3 Results

Thu Oct 24, 2019 10:55 pm

SESGDL wrote:
Have all major US carriers now reported results? Anyone want to take a stab at compiling a list of all of them?


AFAIK, everybody (among the ten major U.S. carriers) who reports has by now reported. (Frontier is privately held.)

Google searches will serve you well. You can find press releases that commonly have income statements and balance sheet, or you can check the SEC filings.

'Delta Air Lines earnings' is a good search format. 'SEC filings Delta Air Lines' will work, too. Look at 10-K or 10-Q filings.

You might look at and rank carriers by:

Available Seat Miles or Revenue Passenger Miles

total operating Revenue (or Passenger Revenue)

Net Income

Margins (Net Income/Revenues)

I don't believe every carrier reports TRASM (total revenue per available seat mile). I think some carriers have dropped PRASM (passenger revenue per available seat mile) in favor of TRASM so I'm not sure you can get a consistent, industry-wide revenue per seat mile.
 
umichman
Posts: 187
Joined: Sun Apr 07, 2019 2:42 am

Re: AA Reports Q3 Results

Thu Oct 24, 2019 11:04 pm

OneX123 wrote:
I fly with AA weekly and hold status with the airline. I've always defended its onboard product. I flew on my first oasis 737 Monday (albeit in the emergency row window. Personally, I don't mind having no IFE. 1. I really value the extra space provided by not having the box under the seat in front of you and 2. I prefer watching live tv which on AA is on your phone anyway.

With that being said, the first class was a joke. No IFE and just a cheap-looking layout overall. I was amazed at how tight it was in the front row. The aisle seemed to reduce in size by half and the left-hand aisle seat (1C?) seemed to be directly in the aisle. It was disappointing to see.


Modern IFE systems no longer have the underseat boxes. They are basically seatback tablets these days.
 
1989worstyear
Posts: 887
Joined: Sun Dec 04, 2016 6:53 pm

Re: AA Reports Q3 Results

Fri Oct 25, 2019 3:11 am

umichman wrote:
OneX123 wrote:
I fly with AA weekly and hold status with the airline. I've always defended its onboard product. I flew on my first oasis 737 Monday (albeit in the emergency row window. Personally, I don't mind having no IFE. 1. I really value the extra space provided by not having the box under the seat in front of you and 2. I prefer watching live tv which on AA is on your phone anyway.

With that being said, the first class was a joke. No IFE and just a cheap-looking layout overall. I was amazed at how tight it was in the front row. The aisle seemed to reduce in size by half and the left-hand aisle seat (1C?) seemed to be directly in the aisle. It was disappointing to see.


Modern IFE systems no longer have the underseat boxes. They are basically seatback tablets these days.


Not quite. There is still usually one box that's used as a power supply and Ethernet hub for the monitors (which, as you correctly noted, are basically tablet PC's on steroids).

Way better than the monstrosities from 10 years ago regardless.
Stuck at age 15 thanks to the certification date of the A320-200 and my parents' decision to postpone having a kid by 3 years. At least there's Dignitas...
 
MSPNWA
Posts: 3698
Joined: Thu Apr 23, 2009 2:48 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 7:09 am

It appears like AA has stemmed the tide, but they have a lot of work to do, mostly on the cost side. The MAX has been a double whammy since it also slows the badly needed Oasis retrofits.

N757ST wrote:
285 million a quarter to service their debt load.


Interest expense isn't stopping AA from vastly improving earnings. AA's other expenses aren't dramatically higher than its competitors. All of them carry debt and related interest expense. And if we take into account the [i]gain[/i] from having a newer, more efficient fleet, AA's earnings should be higher than if the interest expense was lower with an older fleet.

winginit wrote:
This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.


It's not so staggering when you look at competitors numbers and see similar results. Take away the credit card business, and all the legacies have vastly smaller incomes.
 
Elementalism
Posts: 616
Joined: Sat Jun 10, 2017 4:03 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 1:30 pm

Brickell305 wrote:
jumbojet wrote:
Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


That is kind of amusing. It has been years since I heard an airline push their card on a flight. Both international flights I took with AA in Sept they were pushing their card. And we could submit an application with a flight attendant.

1% profit on their flying is bad. Wont take much of an economic downturn to turn that into a net loss including cargo.
 
AAplat4life
Posts: 328
Joined: Thu Jun 23, 2011 11:14 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 1:49 pm

Publicity wise, AA has stemmed the tide for now, but the media will soon turn. There is no indications that AA will start seeing financial results similar to its rivals anytime soon, and so I don’t really see them bouncing back in 2020. Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much. The earnings call was unconvincing and some of the answers seemed incoherent.

BTW, I don’t fault management for the LatAm loss. That was due to regulatory problems. In fact, that part of the world has so much upheaval that makes being the largest carrier a risky proposition. Yet AA is going to face more competition now on those flights, and that will add to the problems.
 
luckyone
Posts: 3610
Joined: Thu Aug 21, 2008 1:50 pm

Re: AA Reports Q3 Results

Fri Oct 25, 2019 2:49 pm

Elementalism wrote:
Brickell305 wrote:
jumbojet wrote:

Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


That is kind of amusing. It has been years since I heard an airline push their card on a flight. Both international flights I took with AA in Sept they were pushing their card. And we could submit an application with a flight attendant.

1% profit on their flying is bad. Wont take much of an economic downturn to turn that into a net loss including cargo.

Really? I can't recall the last time I did NOT hear a credit card announcement on a US domestic flight.
 
9w748capt
Posts: 1771
Joined: Sat Feb 02, 2008 10:27 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 3:59 pm

Curious if there's been a change to the forum rules. Is using a word like "Dougie" no longer allowed?
 
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JetAwayDrew
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 4:12 pm

AAplat4life wrote:
Publicity wise, AA has stemmed the tide for now, but the media will soon turn. There is no indications that AA will start seeing financial results similar to its rivals anytime soon, and so I don’t really see them bouncing back in 2020. Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much. The earnings call was unconvincing and some of the answers seemed incoherent.

BTW, I don’t fault management for the LatAm loss. That was due to regulatory problems. In fact, that part of the world has so much upheaval that makes being the largest carrier a risky proposition. Yet AA is going to face more competition now on those flights, and that will add to the problems.


I thought ORD was the best performing hun financially last quarter?

“Despite cancelling their Asia flying, and despite United’s buildup in Chicago, American remains bullish on O’Hare. Senior Vice President of Revenue Management Don Casey says that Chicago was “the best performing hub for unit revenue” in the third quarter and that they grew corporate passenger business 7% during the quarter.”

https://viewfromthewing.com/seven-thing ... ardingArea
 
usairways85
Posts: 4198
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 4:26 pm

AAplat4life wrote:
Publicity wise, AA has stemmed the tide for now, but the media will soon turn. There is no indications that AA will start seeing financial results similar to its rivals anytime soon, and so I don’t really see them bouncing back in 2020. Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much. The earnings call was unconvincing and some of the answers seemed incoherent.

It almost seems like it is a hub performance merry-go-round. One quarter they call out CLT, the next DFW, the next PHL/ORD, the next ORD, the next DCA/CLT, etc.

PHL is under a relative aggressive assault by NK and F9. NK is up to 12 destinations and F9 is likely over 30 (obviously very seasonal). NK and F9 will each have ~2 daily flights on PHL-SJU. A route that AA had a monopoly since the AA draw down of SJU.
 
FSDan
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 4:27 pm

AAplat4life wrote:
Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much.


Definitely LAX and NYC. I believe MIA is struggling too due to the huge LCC growth at FLL.
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UpNAWAy
Posts: 713
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 4:35 pm

ORD does really well to Europe in the summer and will get more seasonal flying. ORD to AISA wasn't good and served no purpose in competing with LAX or DFW. ORD is bad in the winter and will see less service, no big surprise there.

As to LATAM DP mentioned in the State of the Airline them leaving was 100% due to the governments ruling which forced them to seek a JV with someone they government will likely approve.
 
FSDan
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 4:47 pm

UpNAWAy wrote:
ORD is bad in the winter and will see less service, no big surprise there.


This is definitely visible in the January schedules for ORD. Service is way down from summer levels, including significant cuts even in major business markets like ORD-SEA, ORD-MSP, ORD-LGA, ORD-BOS, etc. However, it's good to see AA making appropriate seasonal adjustments to capacity (e.g. beef up ORD and PHL in the summer, beef up PHX and MIA in the winter) as opposed to keeping capacity inflexible and flying empty planes.
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spinotter
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 5:01 pm

MSPNWA wrote:
It appears like AA has stemmed the tide, but they have a lot of work to do, mostly on the cost side. The MAX has been a double whammy since it also slows the badly needed Oasis retrofits.

N757ST wrote:
285 million a quarter to service their debt load.


Interest expense isn't stopping AA from vastly improving earnings. AA's other expenses aren't dramatically higher than its competitors. All of them carry debt and related interest expense. And if we take into account the [i]gain[/i] from having a newer, more efficient fleet, AA's earnings should be higher than if the interest expense was lower with an older fleet.

winginit wrote:
This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.


It's not so staggering when you look at competitors numbers and see similar results. Take away the credit card business, and all the legacies have vastly smaller incomes.


Can someone explain to me how the airlines are making so much money with credit card companies? Enough so that AA might have reported a loss in the most recent quarters without the contribution made by credit cards?
 
winginit
Posts: 3067
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 5:18 pm

MSPNWA wrote:
It appears like AA has stemmed the tide, but they have a lot of work to do, mostly on the cost side. The MAX has been a double whammy since it also slows the badly needed Oasis retrofits.

N757ST wrote:
285 million a quarter to service their debt load.


Interest expense isn't stopping AA from vastly improving earnings. AA's other expenses aren't dramatically higher than its competitors. All of them carry debt and related interest expense. And if we take into account the [i]gain[/i] from having a newer, more efficient fleet, AA's earnings should be higher than if the interest expense was lower with an older fleet.

winginit wrote:
This really is just staggering. The largest airline in the world by some metrics operating in one of the more prosperous economic climates in years with reasonable fuel costs is not making money on it's core business. Shocking.


It's not so staggering when you look at competitors numbers and see similar results. Take away the credit card business, and all the legacies have vastly smaller incomes.


Having credit card revenues contribute significantly to income is one thing, but for it to be the difference between profitable and not is staggering, and that’s the unfortunate situation AA finds themselves in. Pathetic really.
 
tphuang
Posts: 5860
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 5:22 pm

FSDan wrote:
AAplat4life wrote:
Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much.


Definitely LAX and NYC. I believe MIA is struggling too due to the huge LCC growth at FLL.


Nyc is on life support. By my yield analysis, they have lost so much pricing power at NYC that there is no coming back.
 
Miamiairport
Posts: 828
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Re: AA Reports Q3 Results

Fri Oct 25, 2019 6:21 pm

MIA as noted is being impacted by ULCCs at FLL in addition to more LCCs from Europe (Air Italy, Eurowings, etc) as well as struggling and/or unstable SA economies. MIA was the darling at one time for LAA before all of this started.

Unlike JFK for LAX there's no airport down the road to replace connecting capacity. I wonder how much ink LAX bleeds.
 
UpNAWAy
Posts: 713
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA Reports Q3 Results

Fri Oct 25, 2019 7:04 pm

tphuang wrote:
FSDan wrote:
AAplat4life wrote:
Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much.


Definitely LAX and NYC. I believe MIA is struggling too due to the huge LCC growth at FLL.


Nyc is on life support. By my yield analysis, they have lost so much pricing power at NYC that there is no coming back.



So NYC which always lost money but now is slightly profitable and your analysis is they are losing pricing power? What good is pricing power (?) if it comes at a loss not a profit?
 
delimit
Posts: 840
Joined: Fri Jan 09, 2009 8:08 pm

Re: AA Reports Q3 Results

Fri Oct 25, 2019 7:28 pm

So NYC which always lost money

Is this true? That certainly wasn't the conventional wisdom when Delta started their expansion in NYC.
 
OB1504
Posts: 4000
Joined: Tue Jul 27, 2004 5:10 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 8:10 pm

FSDan wrote:
AAplat4life wrote:
Taking management at its word that the financial results at DFW, CLT and DCA represent AA’s best performing hubs, the question in my mind is where are the network and other hubs lagging behind so much as to impact earnings so much.


Definitely LAX and NYC. I believe MIA is struggling too due to the huge LCC growth at FLL.


Plus Frontier trying to build up MIA again and Delta will likely try to go after AA’s most profitable domestic markets out of MIA soon, too.
 
tphuang
Posts: 5860
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA Reports Q3 Results

Fri Oct 25, 2019 8:13 pm

UpNAWAy wrote:
tphuang wrote:
FSDan wrote:

Definitely LAX and NYC. I believe MIA is struggling too due to the huge LCC growth at FLL.


Nyc is on life support. By my yield analysis, they have lost so much pricing power at NYC that there is no coming back.



So NYC which always lost money but now is slightly profitable and your analysis is they are losing pricing power? What good is pricing power (?) if it comes at a loss not a profit?

I believe what they said is JFK international is making money now. JFK is profitable now since they cut most of the major money losing routes. But that has come at the cost of LGA operation going even further into negatives. JFK can be profitable if they keep it at 65 flights a day. If they try to do 110 flights, it's a huge money losing operation. That's why you see them continually canceling JFK flights.

Keep in mind, this has allowed DL to turn around their fortunes in NYC and now DL has money to attack vulnerable AA hubs like MIA and more resources to throw at LAX.
 
D L X
Posts: 12717
Joined: Thu May 27, 1999 3:30 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 8:44 pm

Brickell305 wrote:
jumbojet wrote:
Brickell305 wrote:
[
AA lost money flying passengers in Q3. Yikes.


Umm, I dont think it says that anywhere.


Yes it does. From the article:

I’ve made the point in the past that American Airlines largely makes money selling credit cards, not from their flying. That wasn’t the case in the second quarter (they made money doing both) and the airline’s reported numbers for Q3 show they repeated that success.

Passenger revenue was $9.6 billion.
The cost of flying planes was $9.7 billion.
However if you add in cargo revenue the airline made $115 million for the quarter. That’s just a 1% margin on their flying.
So unlike the third quarter of last year and also the fourth quarter American Airlines (barely) made money flying planes.

American should be in a position where passenger revenue per available seat mile (PRASM) is greater than cost per available seat mile (CASM) but isn’t. And given the importance of credit card revenue to their bottom-line, it ought to be better integrated into route planning – building up flying to support the underlying credit card business in key markets where spend is greatest such as New York and the Bay Area (instead of gutting their relationship with Alaska Airlines which gave them some relevance in Northern California and tech-heavy Seattle).


They lost money on passengers solely. It's not unless cargo revenue is included that flying was profitable for them for the quarter.


1) The article you're quoting is from View From the Wing, not AA's earnings report, or any other reputable source. (As in, you should never accept Gary Leff's statements as fact. He is a hack.)

2) You're still wrong because AA did not lose money flying passengers. In fact, they did not lose money. Cargo flies too, and cargo both generates revenue and requires fuel. Comparing the passenger revenue (which does not include cargo revenus) to the cost of flying planes (which includes the cost to fly the cargo) is apples to oranges, and you've peeled the apples.
 
D L X
Posts: 12717
Joined: Thu May 27, 1999 3:30 am

Re: AA Reports Q3 Results

Fri Oct 25, 2019 8:46 pm

Miami wrote:
Again, Doug Parker needs to go.

The stock popped today on this earnings report. Parker stays.

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