Is Delta The Worlds Most Profitable Airline?

Max Q · Wed Jul 15, 2015 2:24 pm

Another impressive quarter. They seem to be printing money in Atlanta these days, is anyone more profitable ?

Prost · Wed Jul 15, 2015 2:27 pm

American has been lately.

panamair · Wed Jul 15, 2015 2:41 pm

No, margin wise, there are some smaller carriers such as COPA or Alaska that perform better.

MaverickM11 · Wed Jul 15, 2015 2:43 pm

Quoting Max Q (Thread starter):
Another impressive quarter. They seem to be printing money in Atlanta these days, is anyone more profitable ?

It's clearly their fabulous product that is multiples better than EK's and their 5% margin

Quoting panamair (Reply 2):
No, margin wise, there are some smaller carriers such as COPA or Alaska that perform better.

I think CM has regularly been the most profitable on a margin basis, though lately with Brazil falling apart I think it'll take a big hit.

adamblang · Wed Jul 15, 2015 2:45 pm

Quoting Max Q (Thread starter):
is anyone more profitable ?

Impossible to say since a number of airlines that one could speculate are more profitable don't publish numbers that conform to generally accepted accounting practices.

questions · Wed Jul 15, 2015 2:49 pm

And their loyalty program, SkyMiles, that hooks people but provides awful benefits... brilliant.

jetblue1965 · Wed Jul 15, 2015 2:55 pm

I recall some ULCCs like Spirit command higher PTI margins. In terms of absolute profit, AA is higher (fresh out of BK helps a lot in that front)

Quoting questions (Reply 5):
And their loyalty program, SkyMiles, that hooks people but provides awful benefits... brilliant.

Such as ONE-WAY upgrade price of 60,000 miles from Y to J for a 6.5 hour JFK-LHR flight from full fare economy (just announced yesterday).

AA, on the other hand, charges 50,000 miles for a straight up J redemption for US-Europe without playing the upgrade lottery. (to be fair, every time you touch BA metal, you're subject to their ridiculous fuel surcharges)

Rdh3e · Wed Jul 15, 2015 3:27 pm

Spirit has margins far and away exceeding DL's.

Coal · Thu Jul 16, 2015 4:13 am

Absolute profits are not even close to being a good metric of performance if you have to use significantly higher amounts of capital to achieve them.

Margins are certainly a better measure, although then you're just comparing a number to the revenue you're generating. What you really need to look at is ROCE (Return On Capital Employed) if you truly want to measure the performance of a company. By that measure, DL's ROCE is ~6% while that of NK is ~34% (figures taken off the internet and not calculated from the financial statement given I'm on mobile).

Rgds
Coal

Max Q · Thu Jul 16, 2015 6:28 am

Margins are one thing.

But just discussing pure profit here, whose is the largest worldwide ?

Looks like AA, DL, UA and the rest of the world in that order.

Times have certainly changed.

737tdi · Thu Jul 16, 2015 6:35 am

Quoting Max Q (Reply 9):
Margins are one thing.

But just discussing pure profit here, whose is the largest worldwide ?

Looks like AA, DL, UA and the rest of the world in that order.

Times have certainly changed.

Does it not help when you are paying bankruptcy wages? Contracts cancelled, wages forfeited, bills thrown out the window. Oh hey, we can declare bankruptcy and void every agreement we have with all of the labor groups, creditors, etc..???? They are making money because they got rid of their bills. Give it a few years and we will see the same scenario.

Max Q · Thu Jul 16, 2015 8:45 am

Quoting 737tdi (Reply 10):
Does it not help when you are paying bankruptcy wages? Contracts cancelled, wages forfeited, bills thrown out the window. Oh hey, we can declare bankruptcy and void every agreement we have with all of the labor groups, creditors, etc..???? They are making money because they got rid of their bills. Give it a few years and we will see the same scenario.

Not really, I can only speak on the Pilot side of things but I can tell you as an employee of one of the big three that our current contract and pay rates are by far the most lucrative we have ever seen.

You need to look at the airline business as it used to be before this last major wave of consolidation, in good times most airlines did reasonably well but in bad times it was disaster, overall no one could make money in the long term.

The power of the big 3 in the US now is so significant and the dominance in major respective markets so encompassing it has completely changed the overall dynamic of the American airline industry, that along with good management (mostly) and tight capacity controls has set the stage for the record returns we see now and stability in the future.

The potential was always there, it is finally being realized.

tommy1808 · Thu Jul 16, 2015 9:48 am

Quoting Max Q (Reply 11):
and tight capacity controls has set the stage for the record returns we see now and stability in the future.

so, basically you are saying that the US3 are doing so well because they refuse to compete instead of by having a more attractive product?

best regards
Thomas

MaverickM11 · Thu Jul 16, 2015 10:04 am

Quoting tommy1808 (Reply 12):
so, basically you are saying that the US3 are doing so well because they refuse to compete instead of by having a more attractive product?

I think this profit proves definitively that people pay more for the US3's product than the ME3. I guess it's just better

Navigator · Thu Jul 16, 2015 11:04 am

Quoting Max Q (Thread starter):
Another impressive quarter. They seem to be printing money in Atlanta these days, is anyone more profitable

Ryanair is more profitable

EA CO AS · Thu Jul 16, 2015 11:14 am

Quoting tommy1808 (Reply 12):

so, basically you are saying that the US3 are doing so well because they refuse to compete

No, they're doing so well because they refuse to compete foolishly like they used to, chasing market share instead of profitability and flying unpopular routes because they were labeled "strategic," and so forth.

Sanity has finally prevailed; in this industry you're no longer only as smart as your dumbest competitor.

enzo011 · Thu Jul 16, 2015 1:01 pm

Saving on taxes by losing billions in the past also helps...now they don't have to pay as much because they were so terrible before. Talk about rewarding failure.

http://www.bloomberg.com/bw/articles...e-profits-wont-pay-taxes-for-years

Marvinhsv · Thu Jul 16, 2015 1:36 pm

Quoting MaverickM11 (Reply 13):
I think this profit proves definitively that people pay more for the US3's product than the ME3. I guess it's just better

This is by far the worst comparision I've ever heard of. Generating more profit with a fleet of at least twice as many aircraft isn't something you can be proud of. On the other hand if you don't you should be ashamed.

Polot · Thu Jul 16, 2015 1:43 pm

Quoting Marvinhsv (Reply 17):
This is by far the worst comparision I've ever heard of. Generating more profit with a fleet of at least twice as many aircraft isn't something you can be proud of. On the other hand if you don't you should be ashamed.

I believe the US3's margins are also better than EK (maybe not UA), in some cases significantly so, which somewhat takes into account differences in fleet/company sizes.

Marvinhsv · Thu Jul 16, 2015 1:48 pm

Quoting Polot (Reply 18):
into account differences in fleet/company sizes.

Yes but how about the ME3 having hundreds of aircrafts on order and taking delivery of them every month?!

Also for the ME3 it's not just about profits and a high margin but about prestige. As they're all tied to the governments in some way there's always money available.

Polot · Thu Jul 16, 2015 2:00 pm

Quoting Marvinhsv (Reply 19):
Yes but how about the ME3 having hundreds of aircrafts on order and taking delivery of them every month?!

The US3 also have hundred of aircraft on order (albeit a lower order value)?

Quoting Marvinhsv (Reply 19):
Also for the ME3 it's not just about profits and a high margin but about prestige. As they're all tied to the governments in some way there's always money available.

No one is denying that, but don't get all upset if someone suggests they are not actually the most profitable airlines in the world then. Nobody said they are bankrupt, and you are kind of proving the point that people don't pay all out just for service...

IrishAyes · Thu Jul 16, 2015 2:15 pm

Quoting MaverickM11 (Reply 3):
I think CM has regularly been the most profitable on a margin basis, though lately with Brazil falling apart I think it'll take a big hit.

Venezuela issues have also hit CM pretty hard lately.

warren747sp · Thu Jul 16, 2015 2:18 pm

No A380s and reward seats rarely available on international routes. Sounds like the formula.

Marvinhsv · Thu Jul 16, 2015 2:47 pm

Quoting Polot (Reply 20):
hundred of aircraft on order

Probably yes but the only thing I see are new Delta 737s being delivered and a few Airbus' to American. the ME3 are taking delivery of 777s and so on which cost the same as at least 3 737s. They must have way higher costs when it comes to fleet expansion.

bgm · Thu Jul 16, 2015 2:58 pm

People fly the US3 mostly because the vast majority of their flights are domestic, and consumers have no other choice. This is how they can get away with awful service standards and still be profitable.

MaverickM11 · Thu Jul 16, 2015 3:27 pm

Quoting Marvinhsv (Reply 17):
This is by far the worst comparision I've ever heard of. Generating more profit with a fleet of at least twice as many aircraft isn't something you can be proud of. On the other hand if you don't you should be ashamed.

Not at all. Everyone thinks the ME3 are successful (no data, of course) because their product is so much better than the US3, so when DL has a margin that is 3-4x that of EK, *clearly* it should follow that DL's product is much better.

Quoting Polot (Reply 18):
I believe the US3's margins are also better than EK (maybe not UA), in some cases significantly so, which somewhat takes into account differences in fleet/company sizes.

2-3x better

jacobin777 · Thu Jul 16, 2015 3:32 pm

Quoting MaverickM11 (Reply 25):
(no data, of course)

That's simply false.

chrisp390 · Fri Jul 17, 2015 5:33 am

Quoting bgm (Reply 24):

I find it funny the whole world seems to think US domestic airlines have this horrid product. How many people saying that have actually flown on DL since the merger and seen it. DL has a better business class seat than EK, just without all the bling and then look at Chinese airlines. Nobody talks about Chinese domestic flights and how horrible they are.

deltal1011man · Fri Jul 17, 2015 5:57 am

Quoting Max Q (Reply 11):

Not really, I can only speak on the Pilot side of things but I can tell you as an employee of one of the big three that our current contract and pay rates are by far the most lucrative we have ever seen.

I wont comment on the CO side of things. (in and out of BK and union busting changes things.)

Its not at Delta. Frozen pension, wages are still lower when you judge for inflation and outsource (I won't even bring up work rule changes) its not even that close.

Quoting chrisp390 (Reply 27):

I find it funny the whole world seems to think US domestic airlines have this horrid product. How many people saying that have actually flown on DL since the merger and seen it. DL has a better business class seat than EK, just without all the bling and then look at Chinese airlines. Nobody talks about Chinese domestic flights and how horrible they are.

My favorite is the EU carrier fan boys. Airlines like BA have a joke of a product up front in the short haul fleet compared to the US3

Quoting Max Q (Thread starter):
s anyone more profitable ?

AA is more profitable just on pure profit

Airlines like NK (and i bet G4) are simply killing it on margins. (but again, that awesome product airlines like EK and even VX have are the "real" winners

)

Quoting Marvinhsv (Reply 17):

This is by far the worst comparision I've ever heard of. Generating more profit with a fleet of at least twice as many aircraft isn't something you can be proud of. On the other hand if you don't you should be ashamed.

So lets compare margins of NK to that of EK. NK is about 1/3 the airline EK is and does nothing but domestic flying. (and low yielding crap generally at that)

Wanna compare those margins? That alone kills this stupid idea of product pays. Nope running a business like a business is what pays. *unless you have government funding to bail you out, in which case you do what you want.

mayor · Fri Jul 17, 2015 4:35 pm

Quoting Enzo011 (Reply 16):
Saving on taxes by losing billions in the past also helps...now they don't have to pay as much because they were so terrible before. Talk about rewarding failure.

According to the article, only 2 years of losses are being used.....2008 & 2009...........aside from that, before you think that DL was so terrible, before, please look at their financial performance for more than the last 5 years.

Quoting Marvinhsv (Reply 23):

Probably yes but the only thing I see are new Delta 737s being delivered and a few Airbus' to American. the ME3 are taking delivery of 777s and so on which cost the same as at least 3 737s. They must have way higher costs when it comes to fleet expansion.

As well as A330-200s and -300s on the order books.......A321s on the order books and A330-900s and A350s on the order books........how about that?

Anyway, the US3 have much different networks than the ME3.........therefore the fleet will be different.

UA444 · Fri Jul 17, 2015 5:00 pm

Quoting Marvinhsv (Reply 23):

Then you aren't looking very hard. UA is taking 737s, 787s and has 777s and A350s coming. AA is taking A321s and 787s, and DL is taking 737s and A330s.

enzo011 · Fri Jul 17, 2015 8:56 pm

Quoting mayor (Reply 29):
According to the article, only 2 years of losses are being used.....2008 & 2009...........aside from that, before you think that DL was so terrible, before, please look at their financial performance for more than the last 5 years.

Yes, and in those 2 years the losses were almost $2 billion. So when people shout about how wonderful the company is, I have to ask how great are they seeing as only 8 years ago they were losing that much. Also in the article, they have another $15 Billion in past losses that they can use apply against future tax earnings.

DL isn't alone as the other 2 airlines are also sitting on billions of dollars that they can use. UAL has $10.3 Billion and AA has $4.3 Billion.

deltal1011man · Fri Jul 17, 2015 11:42 pm

Quoting mayor (Reply 29):

As well as A330-200s and -300s on the order books

FWIW just A330-300s, A330-900s, A350-900s and 787-8s. No 332s.

mayor · Sat Jul 18, 2015 3:45 am

Quoting Deltal1011man (Reply 32):

FWIW just A330-300s, A330-900s, A350-900s and 787-8s. No 332s.

Oops

Quoting Enzo011 (Reply 31):

Quoting mayor (Reply 29):
According to the article, only 2 years of losses are being used.....2008 & 2009...........aside from that, before you think that DL was so terrible, before, please look at their financial performance for more than the last 5 years.

Yes, and in those 2 years the losses were almost $2 billion. So when people shout about how wonderful the company is, I have to ask how great are they seeing as only 8 years ago they were losing that much. Also in the article, they have another $15 Billion in past losses that they can use apply against future tax earnings.

DL isn't alone as the other 2 airlines are also sitting on billions of dollars that they can use. UAL has $10.3 Billion and AA has $4.3 Billion.

Well, if you're going to cherry pick the history that fits your argument.......maybe you could look at their financial performance as a whole since de-regulation or even a few years before that.

enzo011 · Sat Jul 18, 2015 8:18 am

Quoting mayor (Reply 33):
Well, if you're going to cherry pick the history that fits your argument.......maybe you could look at their financial performance as a whole since de-regulation or even a few years before that.

The question of the thread is whether DL is the most profitable airline. I was merely responding that they are able to defer tax payments due to losses in the past. This is inconvenient for some as a popular discussion point about airlines vs the ME3 is that DL has higher margins and has more profits. If you cannot look at one of the factors for this then it is cherry picking. This is not to say that they aren't doing well now as a company for their shareholders, just that they are being rewarded for losing billions previously. Is that statement right or wrong?

slinky09 · Sat Jul 18, 2015 10:55 am

Quoting chrisp390 (Reply 27):
I find it funny the whole world seems to think US domestic airlines have this horrid product.

I'd rather fly DL domestic First than BA Club Europe - OK if you ask for the secret champagne on BA you can get it, but in all other respects most US domestic Firsts are pretty good products.

Quoting tommy1808 (Reply 12):
so, basically you are saying that the US3 are doing so well because they refuse to compete instead of by having a more attractive product?

I've been keeping track of my flying and costs for years, airfare inflation has been significant , averaging at about 40% over the last five years on many of the routes I frequently fly. This, surcharges, and cuts in services have probably contributed more to profitability than other measures, including capacity control (that only helps drive prices up further). The US3 are in danger of becoming monopolistic.

HALtheAI · Sat Jul 18, 2015 11:33 am

Well considering the US3 have a huge protected domestic market to price-gouge the hell out of, one would hope they'd be able to achieve bigger profits than EK, who actually face intense competition on most of their routes, including from state-subsidized airlines. EK is also expanding aggressively, which means sacrificing yields for increased market share, while the US3 are happy with what they have.

MaverickM11 · Sat Jul 18, 2015 12:10 pm

Quoting Marvinhsv (Reply 17):
Generating more profit with a fleet of at least twice as many aircraft isn't something you can be proud of. On the other hand if you don't you should be ashamed.

You've just demonstrated loud and clear you failed basic math and economics

Quoting Polot (Reply 18):
I believe the US3's margins are also better than EK (maybe not UA), in some cases significantly so, which somewhat takes into account differences in fleet/company sizes.

, certainly better than the other two as well

Quoting Marvinhsv (Reply 19):
Also for the ME3 it's not just about profits and a high margin but about prestige.

Oh it's prestige now? Do labor unions accept payment in prestige? Maybe Airbus accepts prestige in lieu of money now?

Quoting Jacobin777 (Reply 26):
That's simply false.

You must be reading a different thread.

Quoting slinky09 (Reply 35):
I'd rather fly DL domestic First than BA Club Europe - OK if you ask for the secret champagne on BA you can get it, but in all other respects most US domestic Firsts are pretty good products.

30" regional EU first is the pits

Quoting HALtheAI (Reply 36):
Well considering the US3 have a huge protected domestic market to price-gouge the hell out of, one would hope they'd be able to achieve bigger profits than EK, who actually face intense competition on most of their routes, including from state-subsidized airlines.

EK would lose their shirt in the domestic market. What "price gouged" market would they enter? ATLICT with a 380?

mayor · Sat Jul 18, 2015 6:01 pm

Quoting Enzo011 (Reply 34):
This is not to say that they aren't doing well now as a company for their shareholders, just that they are being rewarded for losing billions previously. Is that statement right or wrong?

So, the company shouldn't be allowed to use any legal tax reporting methods available to them? If you don't like it, blame the IRS, not the company that uses the regulations.

enzo011 · Sat Jul 18, 2015 8:25 pm

Quoting mayor (Reply 38):
So, the company shouldn't be allowed to use any legal tax reporting methods available to them? If you don't like it, blame the IRS, not the company that uses the regulations.

I have no particular feelings towards companies using anything they can to their advantage, as long as they don't cry about other companies that enjoy advantages that they aren't able to enjoy either (non-unionised workforce in the UAE for example).

mayor · Sat Jul 18, 2015 8:36 pm

Quoting Enzo011 (Reply 39):
I have no particular feelings towards companies using anything they can to their advantage, as long as they don't cry about other companies that enjoy advantages that they aren't able to enjoy either (non-unionised workforce in the UAE for example).

I doubt if DL, in particular, is crying about that, seeing as how the only unionized workers at DL are the Dispatchers and the Pilots.

tortugamon · Sat Jul 18, 2015 10:25 pm

Quoting Enzo011 (Reply 16):
Saving on taxes by losing billions in the past also helps...now they don't have to pay as much because they were so terrible before. Talk about rewarding failure.

I believe carry forward losses are GAAP and common in a variety of countries. Expenses and the revenues associated with them don't always come in the same calendar year.

Quoting bgm (Reply 24):
People fly the US3 mostly because the vast majority of their flights are domestic, and consumers have no other choice. This is how they can get away with awful service standards and still be profitable.

The flight I tend to make the most in the US is over 5 hours in length and there are over 550 options on 12 different airlines per day 50+ of them non-stop on five different airlines

Quoting Navigator (Reply 14):
Ryanair is more profitable

DL made the same amount in the last quarter as RyanAir has in the last year.

Quoting Enzo011 (Reply 39):
I have no particular feelings towards companies using anything they can to their advantage, as long as they don't cry about other companies that enjoy advantages that they aren't able to enjoy either (non-unionised workforce in the UAE for example).

Just like corporations establishing Irish HQs for the low corporate tax rate and other business friendly practices

tortugamon

airplaneboy · Sat Jul 18, 2015 10:36 pm

Southwest Airlines has been profitable *every* year since 1973. No airline in the world can claim that.

jetblue1965 · Sun Jul 19, 2015 3:26 am

Quoting tortugamon (Reply 41):

Let me guess... You tend to fly JFK-LAX ?

737tdi · Sun Jul 19, 2015 5:44 am

Quoting Max Q (Reply 11):
Not really, I can only speak on the Pilot side of things but I can tell you as an employee of one of the big three that our current contract and pay rates are by far the most lucrative we have ever seen.

You need to look at the airline business as it used to be before this last major wave of consolidation, in good times most airlines did reasonably well but in bad times it was disaster, overall no one could make money in the long term.

I have to ask, although inappropriate. Are you making the same as WN flight crews? Are your mechanics making a legitimate wage? It easy for flight crews to forget the folks that work on their aircraft. You trust your lives to us, literally. I am a trained mechanic, licensed, experienced, dedicated to my company. My company wants to degrade this. Contract mechs. who are licensed but know nothing about the 737. Do you want them working on the aircraft you fly? I just don't get it. Contract out non-maintenance stations. I was downline a few days ago and that poor aircraft would have been out of service for days when it was a simple rigging problem. Experience means a lot.

Why don't the senior pilots express their position when it comes to flying a safe aircraft?

cbphoto · Sun Jul 19, 2015 7:39 pm

No, Delta is not the most profitable airline in the world percentage wise. While they take in billions, they are a massive company with huge operating costs as well. I just saw an article recently (I'll have to try and dig it up at a later time) that stated right now, Allegiant air is the most profitable airline in the world, followed by Ryanair and then spirit! These company's have relatively low operating costs, and rake in big profits! I believe Allegiant was in the 20-25% profit range, which is huge for airlines!

tortugamon · Sun Jul 19, 2015 10:40 pm

Quoting cbphoto (Reply 45):
Allegiant air is the most profitable airline in the world

I would rather own 1 Delta than 8 Allegiants.

Here is the article that you reference:
http://www.tulsaworld.com/business/a...f-3552-55c2-865a-fb8c1ac42d07.html

tortugamon

cbphoto · Mon Jul 20, 2015 12:48 am

Quoting tortugamon (Reply 46):

Thanks for finding the article for me. No doubt about it, Delta is a much more sound company, but you can't overlook the fact that G4s stock is over $200 a share and has gone up some $50 in the last 2 months. That's pretty remarkable for any airline stock.

mayor · Mon Jul 20, 2015 1:02 am

Quoting cbphoto (Reply 45):

No, Delta is not the most profitable airline in the world percentage wise. While they take in billions, they are a massive company with huge operating costs as well. I just saw an article recently (I'll have to try and dig it up at a later time) that stated right now, Allegiant air is the most profitable airline in the world, followed by Ryanair and then spirit! These company's have relatively low operating costs, and rake in big profits! I believe Allegiant was in the 20-25% profit range, which is huge for airlines!

Pretty easy to have low operating costs if you're not a full service airline.......I don't think any of these carriers offer cargo services, therefore no need for a cargo operation and any costs associated with that. For that matter, Allegiant doesn't even operate 7 days of the week.........to match the legacies in costs, they would have to match the size of the operations, which they don't.

B737900ER · Mon Jul 20, 2015 2:47 am

Quoting mayor (Reply 48):

What does it matter? Allegiant is an airline isn't it? If they don't carry cargo, so what. They are probably more profitable because of it.

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