To build on the discussion we had last quarter, below are the average consensus earnings estimated for US carriers in Q2 by analyst.

AA - $422.2m
AS - $214.5m
B6 - (-$35.3m)
DL - $1,051m
F9 - $17.4m
G4 - $46.3m
NK - (-$40.2m)
SY - $8.1m
UA - $588.1m
WN - $676.0m

Interestingly, analys are forecasting worse results for Q3 for a number of the carrier as a result of the back half of Q3 encompassing a period of declining leisure travel as schools return in mid August in many areas, and the slower September travel period which would normally be more reliant on biz travel for its revenue mix.

Analysts still also forecast that both AA and JetBlue will post full-year losses.

Thanks for sharing. I can't wait to see the actual results (vs the consensus). Overall, I expect Q2 to be pretty solid all the way around. My 'fear' for Quarters 3 & 4 or softening demand and much higher fuel prices, which may lead some/most carriers to a loss.
Anyway, I hope Quarter 2 turns out to be solid, which I think will be the case.

The fall is shaping up to be interesting not just for the airlines, but entire U.S. economy.
Airlines might end up going from one crisis to another.

LAXintl wrote:

AA - $422.2m
AS - $214.5m
B6 - (-$35.3m)
DL - $1,051m
F9 - $17.4m
G4 - $46.3m
NK - (-$40.2m)
SY - $8.1m
UA - $588.1m
WN - $676.0m

Analysts still also forecast that both AA and JetBlue will post full-year losses.

A B6-NK merger is looking more like a "merger of equals" after all. Yikes.

Interesting the only two airlines projected to lose money.

I'm surprised by NK's expected loss. Is this mainly driven by operational issues? The LCCs have typically weathered the pandemic better than most.

LAXintl wrote:

AA - $422.2m

DL - $1,051m

UA - $588.1m
WN - $676.0m

Interesting that UA+AA is about DL's

It is also interesting how amazing WN is performing (for the size).

Of course, actuals will matter.

This is the quarter of the year. Good to see (mostly) profit.

LHUSA wrote:

I'm surprised by NK's expected loss. Is this mainly driven by operational issues? The LCCs have typically weathered the pandemic better than most.

Per their guidance, they saw cost pressures with rising fuel and labor while the volume of operations got trimmed back from plan so generating fewer ASMs.

Analyst see them swinging to profit in Q3.

You know airfares are high when Fed chair Powell specifically mentions them in his briefing comments after their interest rate hike.

UPlog wrote:

You know airfares are high when Fed chair Powell specifically mentions them in his briefing comments after their interest rate hike.

Fares have been raised, at least in part, to depress summer demand that's completely insane right now. If left at previous levels, carriers would have sold out the entire summer's inventory and had nothing left to sell, or for reprotects.

UPlog wrote:

The fall is shaping up to be interesting not just for the airlines, but entire U.S. economy.
Airlines might end up going from one crisis to another.

Which could have been partially avoided, but war and greed win the day.

I am not sure about the appropriate accounting term, but what sort of gross profits are in those those earnings? For most companies below 10% is not a healthy return. (Grocers are a big exception). Airbus and Boeing are doing well if they are at the 12-15% mark.

UPlog wrote:

The fall is shaping up to be interesting not just for the airlines, but entire U.S. economy.
Airlines might end up going from one crisis to another.

I am going to be cautiously optimistic here on the fall. While the economy is looking bad, I do think people will still be wanting to get away. For the sake of all my airline brothers and sisters, we gotta keep moving forward.

Considering the amount of money I have given to UA for tickets booked this quarter, I figure I have contributed a significant amount of that profit

Earnings estimates have been updated for a few carriers:

AA - $435.2m
AS - $219.5m
DL - $1,064m
G4 - $43.1m
UA - $601.0m

Thats amazing - even with wages and fuel costs rising and operational meltdowns their earnings will be even more than projected.

Been flying a lot this month.

AA
Sun Country
DL

All flights 100% full. Not an open seat.

Get the cash now while they can. Many expect Q3 and beyond becoming ever more challenging.

Here are the earnings dates. Kicks off with Delta next week.

Delta - July 13
United - July 20
JetBlue - July 26
Spirit - July 27
Allegiant - July 27
Sun Country - July 27
American - July 28
Alaska - July 28
Southwest - July 28
Frontier - August 03

https://americanairlines.gcs-web.com/st ... 0c1e57111e

AAL updated gudiance.

TRASM & CASM above expectations. Still expects 5% pre-tax margin. Pretty close to their 7.4% pre-tax margin in Q2 2019.

Midwestindy wrote:

https://americanairlines.gcs-web.com/static-files/ba6b67cc-ac90-4547-9501-450c1e57111e

AAL updated gudiance.

TRASM & CASM above expectations. Still expects 5% pre-tax margin. Pretty close to their 7.4% pre-tax margin in Q2 2019.

Thanks for the update. Curious why AA chose to provide updated guidance so close to their earnings release (Not that it’s a bad thing)

Midwestindy wrote:

https://americanairlines.gcs-web.com/static-files/ba6b67cc-ac90-4547-9501-450c1e57111e

AAL updated gudiance.

TRASM & CASM above expectations. Still expects 5% pre-tax margin. Pretty close to their 7.4% pre-tax margin in Q2 2019.

I'm not sure I would call 5% pretty close to 7.4%.

Better get it while they can, QTR 3 & 4 will almost certainly show the US in recession. The only issue is this a short speed bump or a longer malaise? The pent up travel demand might be able to cover a short downturn if a rapid growth returns in spring '23.

UpNAWAy wrote:

Better get it while they can, QTR 3 & 4 will almost certainly show the US in recession. The only issue is this a short speed bump or a longer malaise? The pent up travel demand might be able to cover a short downturn if a rapid growth returns in spring '23.

Don't forget fuel price has collapsed since May/June, 25%+ already. For an airline like AA, that's $1B in cost savings from Q3 vs. Q2.

With continued strict capacity discipline, airlines should be largely profitable for the next couple quarters as much of the tickets are already booked in for Q3 at least.

I actually think a short recession/deflation could work in airlines favor a little, both on the financials and operation sides. What they can't have is something lasting into spring and summer next year.

It's amazing despite all that people complain and the news worthy delays, that the US air traffic system is looking like a shining light compared to what we are seeing across the pond. And I am basing this one percent of flights delayed and lines.

You are correct all in all things are still pretty good despite everything.
The media was flat out fear mongering (lying) over the 4th weekend. Watching the news with my sister and they mention 4,000 delays and over 600 cancellations on Friday and what a disaster that was. I told her that's a fairly normal day depending on the WX. The big lie was the media gave no context like what % or how many daily flights (over 40k) or how that compares to other days. No number of WX/ATC vs operational issues, just using inflaming language like "travel meltdown". It was done all across media, internet, news that weekend, eerily similar like someone gave them speaking points and they all followed them.

https://ir.delta.com/news/news-details/ ... fault.aspx

DL missed earnings expectations:

Operating Margin came in at 11.0% vs. guidance of 13-14%.

Expects 11-13% operating margin for Q3.

Not an accountant so help me with this - excluding the $1.6 billion increase in "Other" income (American Express FF payments?), Delta would have lost almost $1 billion dollars this quarter?

AS appears to have moved their earnings call from July 28 to July 21.

https://www.prnewswire.com/news-release ... 85351.html

I guess they will get more analyst coverage since they are the only ones reporting on that day as opposed to the 28th with WN and AA.

What I find interesting is that while DL & UA had larger exposure to international, especially Asia which hasn't fully recovered, than AA yet they are getting better returns. They did pre-pandemic but to still be doing it despite the impact to their network it not a good sign for AA management.

Well it seems CNBC thinks it higher fares that are the reason Delta showed a profit and not the extra money from American Express. One of us is wrong (probably me

Delta posts profit despite jump in costs, vows to improve reliability after airline ‘pushed too hard’
https://www.cnbc.com/2022/07/13/delta-a ... -2022.html

"Delta Air Lines on Wednesday reported a quarterly profit thanks to travelers willing to pay up to fly, more than making up for higher costs."
"

TWFlyGuy wrote:

What I find interesting is that while DL & UA had larger exposure to international, especially Asia which hasn't fully recovered, than AA yet they are getting better returns. They did pre-pandemic but to still be doing it despite the impact to their network it not a good sign for AA management.

Could also be an indication that those long distance destinations were never highly profitable for either DL or UA. I’m not implying losing routes, but just not highly profitable.

MohawkWeekend wrote:

Not an accountant so help me with this - excluding the $1.6 billion increase in "Other" income (American Express FF payments?), Delta would have lost almost $1 billion dollars this quarter?

The Other Income increase of $1.6b was driven primarily by the Refinery ($1.47b), not AMEX.

TOTAL Revenues of $13.8 billion made up of:
- $10.96 bn pax revenue
- $0.27bn Cargo
- $1.5bn Refinery
- $0.65b Loyalty AMEX
- $0.43b Other

TOTAL expenses of $12.3 billion includes $1.72 billion related to the refinery and ancillary business

So even if you took out AMEX and the Refinery, they would still have reported a profit

"Higher costs hit Delta quarterly profit, shares plunge"
https://www.reuters.com/business/aerosp ... 022-07-13/

Well Wall Street seems to agree with my theory. All your costs are rising faster than revenue (ex-American Express). And that's before new pilot contracts and debt instruments reset at higher rates.

Business plan must be to hope people keep accelerating the use of those credit cards. Or jet fuel prices collapse.

The Other Income increase of $1.6b was driven primarily by the Refinery ($1.47b), not AMEX.

TOTAL Revenues of $13.8 billion made up of:
- $10.96 bn pax revenue
- $0.27bn Cargo
- $1.5bn Refinery
- $0.65b Loyalty AMEX.
- $0.43b Other

TOTAL expenses of $12.3 billion includes $1.72 billion related to the refinery and ancillary business

So even if you took out AMEX and the Refinery, they would still have reported a profit[/quote]

How so ?

From the Qtr report -

"Strong American Express remuneration: Received $1.4 billion in the quarter, up 35 percent compared to the June quarter 2019 and on track to surpass $5 billion for the full year. Co-brand spend was up 43 percent and co-brand card acquisitions were up 15 percent compared to the June quarter 2019."
Refinery operating income of $269 million resulted in a 31¢ per gallon benefit to our adjusted fuel price per gallon

"Other" Revenue was $2.594 billion. "Other" expense was $1.718 billion or $876 million more revenue. Delta only had net income of $735 million dollars.

MohawkWeekend wrote:

"Higher costs hit Delta quarterly profit, shares plunge"
https://www.reuters.com/business/aerosp ... 022-07-13/

Well Wall Street seems to agree with my theory. All your costs are rising faster than revenue (ex-American Express). And that's before new pilot contracts and debt instruments reset at higher rates.

Business plan must be to hope people keep accelerating the use of those credit cards. Or jet fuel prices collapse.

Frankly, Wall Street can thank itself partially for the higher costs (oil speculation). The "take the cake and eat it" mentality from your average investor makes my head spin.

Don't worry about fuel prices a recession will correct that very quickly.

MohawkWeekend wrote:

Received $1.4 billion in the quarter, up 35 percent compared to the June quarter 2019

This is the key statement here...DL exceeded 2019 revenue comparatively. That's freaking huge. And did so with less capacity. Even with CASM creep--not unexpected--to be able to knock the ball out of the park in RASM (with a RASM premium) on less capacity is an enormously good sign.

ObadiahPlainman wrote:

MohawkWeekend wrote:

Received $1.4 billion in the quarter, up 35 percent compared to the June quarter 2019

This is the key statement here...DL exceeded 2019 revenue comparatively. That's freaking huge. And did so with less capacity. Even with CASM creep--not unexpected--to be able to knock the ball out of the park in RASM (with a RASM premium) on less capacity is an enormously good sign.

Note that the increased revenue is because of “other” and cargo. Pax revenue is still less than 2019 (but getting close-it’s 4% lower).

But their revenue was up due to non-flight operation. Do your numbers match these from the 2Q report?
Revenue (excluding refinery and AMEX)
Year 2022 $11.230 billion ( $10.958 billion passenger plus ,272 billion cargo)
Year 2019 $11.554 billion ($11.368 billion passenger plus .186 billion cargo)
Operation costs (excludes refinery and AMEX)
Year 2022 $10,587 ($12.305 billion minus refinery operations of $1.718 billion)
Year 2019 $10,092 ( $10,408 billion minus refinery operations of $.316 billion)

I still stand by the statement they would have lost money this quarter without the additional money from AMEX and the refinery contribution. What am I missing?

Delta would probably not have spent the money on capital of bring planes back into service, new planes, etc... if they knew the did not have the profit coming in. They invested the money made in tickets (revenue) back into the aircraft and the other revenue streams (Amex and Refinery) becomes your profit.

The most fascinating parts of Delta's report:
Business traffic at 65% of 2019. Improving, but ouch!

Staffing is at 95% of 2019. So why the issues? DL had to put me in a hotel July 4th due to the crew timing out.

It will be fascinating to see how each airlines's business travel recovers


https://www.flightglobal.com/strategy/d ... 70.article

Lightsaber

ken4556 wrote:

Delta would probably not have spent the money on capital of bring planes back into service, new planes, etc... if they knew the did not have the profit coming in. They invested the money made in tickets (revenue) back into the aircraft and the other revenue streams (Amex and Refinery) becomes your profit.

So running the airline has become a loss leader for Amex revenue and refinery profits. Only slightly joking.

Is that substainable?

MohawkWeekend wrote:

ken4556 wrote:

Delta would probably not have spent the money on capital of bring planes back into service, new planes, etc... if they knew the did not have the profit coming in. They invested the money made in tickets (revenue) back into the aircraft and the other revenue streams (Amex and Refinery) becomes your profit.

So running the airline has become a loss leader for Amex revenue and refinery profits. Only slightly joking.

Is that substainable?

I mean that's how AA was operating pre-COVID. I *highly* doubt DL will take that approach - but getting any profit with these costs is a positive.

Now they have the BA.5 panic to contend with... looking at Bastian's comments it looks like the high demand was the only bright point this summer... and now it's being ruined yet again

SEAorPWM wrote:

Now they have the BA.5 panic to contend with... looking at Bastian's comments it looks like the high demand was the only bright point this summer... and now it's being ruined yet again

BA.5 is only a problem for business travel in 3Q. For example, all of us on travel must take a Covid19 test 24 hours before entering a bunch of our vendor sites sites (to be fair, they made 100% of our visiting team sick with Covid19 during the BA2.1.12 era). Do this means everyone must test before traveling (to avoid a positive preventing travel back) and then test within 24 hours of going to the vendors. We are considering this possibility too.

Ugh, I was so looking forward to normal business travel.

Lightsaber

jbs2886 wrote:

MohawkWeekend wrote:

ken4556 wrote:

Delta would probably not have spent the money on capital of bring planes back into service, new planes, etc... if they knew the did not have the profit coming in. They invested the money made in tickets (revenue) back into the aircraft and the other revenue streams (Amex and Refinery) becomes your profit.

So running the airline has become a loss leader for Amex revenue and refinery profits. Only slightly joking.

Is that substainable?

I mean that's how AA was operating pre-COVID. I *highly* doubt DL will take that approach - but getting any profit with these costs is a positive.

I agree with you on that outlook. It's an educated gamble that operational revenue will catch up costs. Looks like fuel should be much cheaper but labor and consumable costs are still rising at a very high rate. And the cost of debt is going up too.

lightsaber wrote:

SEAorPWM wrote:

Now they have the BA.5 panic to contend with... looking at Bastian's comments it looks like the high demand was the only bright point this summer... and now it's being ruined yet again

BA.5 is only a problem for business travel in 3Q. For example, all of us on travel must take a Covid19 test 24 hours before entering a bunch of our vendor sites sites (to be fair, they made 100% of our visiting team sick with Covid19 during the BA2.1.12 era). Do this means everyone must test before traveling (to avoid a positive preventing travel back) and then test within 24 hours of going to the vendors. We are considering this possibility too.

Ugh, I was so looking forward to normal business travel.

Lightsaber

Are these antigen or PCR tests? Reason I ask is, antigen tests are pretty quick and easy and I wouldn't think would be too much of a problem, same with indoor mask mandates when visiting on site or on the plane.

I think people, especially in the media (looking at you CNBC), exaggerate the effects of sensible and fairly quick precautions on business travel. PCR's I could see being difficult and expensive though.

United posted net income of $329m, below market estimates.
Looks like fuel was one area that came in higher than projections ($ 4.18gal vs $1.97 in 2021)

https://www.united.com/en/us/newsroom/a ... ion-125231

Shares down 6% on after-hours trading.

Earnings call tomorrow.