majano
Topic Author
Posts: 243
Joined: Sun Oct 14, 2018 10:45 am

Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 5:48 pm

Dear fellow bean counters :) ,

During the 2018 Q4 reporting season, I prepared a comparison of what is commonly referred to as the US3 (being Delta, United and American). Whilst Southwest is a very large airline, the only reason I have not included it in the comparison is because the US3 have large international networks. The tables below are selected items of the 2019 YTD results of the US3. It has been a year of growth allround, particularly the top line.

Looking forward to a good robust discussion.

Key Financial Results-----------------------Delta (2018)----------United (2018)------------American (2018)

Total Revenue ($Million)-------------------47,007 (44,438)--------43,259 (41,303)----------45,768 (44,541)
Operating Margin----------------------------14.08% (11.84%)--------9.94% (7.8.0%)-----------6.70% (6.34%)
Net Profit After Tax--------------------------- 4,767 (3,935)-----------3,009 (2,122)------------1,686 (1,412)

Key Operations Statistics
Yield (Cents)------------------------------------17.79 (17.65)-----------16.55 (16.38)------------17.41 (17.60)
TRASM (Cents)--------------------------------17.07 (16.87)-----------15.18 (15.00)------------16.05 (15.79)
Load Factor-------------------------------------86.30 (85.5%)-----------84.0 (83.6%)-------------84.60 (82.0%)
CASM (Cents)*---------------------------------10.52 (10.31)-----------10.21 (10.11)-------------11.46 (11.06)

In 2018 I excluded CASM because it requires a bit of an explanation. AA reports what it refers to as Operating Cost Per Available Seat Mile (OCASM). United reports CASM, excluding special charges, third-party business expenses, fuel, and profit sharing (Non-GAAP). Delta reports CASM Ex fuel. CASM is now included with the aforesaid explanation.

Delta results are here: https://news.delta.com/delta-air-lines- ... 019-profit
United results are here: https://hub.united.com/2020-01-21-unite ... 83756.html
American results are here: https://americanairlines.gcs-web.com/ne ... ull-year-4
 
seatback
Posts: 604
Joined: Thu Mar 28, 2002 3:00 am

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 6:00 pm

Thanks for doing this! Two points:

1. Wow. AA has moved to number 2 in revenue.
2. No matter how AA spins their earning release, they're still substantial laggards behind their two biggest peers. Makes me wonder if Doug's job is on the line.
 
bnatraveler
Posts: 386
Joined: Tue Dec 02, 2003 10:10 am

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 6:42 pm

I think an even more interesting comparison could be drawn between the three carriers by comparing their revenue and net profit generation on a per airplane in fleet (including express carriers), % mainline vs express carrier, and per employee (unfortunately no good way to include express carriers here). I don't know of a single source yet that has a good number for each of these as of 12/31/19 - the 10K will have that once filed.
 
ScottB
Posts: 6787
Joined: Fri Jul 28, 2000 1:25 am

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 6:44 pm

majano wrote:
Whilst Southwest is a very large airline, the only reason I have not included it in the comparison is because the US3 have large international networks.


I guess? It should be embarrassing to AAL management that LUV managed a much larger after-tax profit on half the revenue. It's not clear to me why "large international network" would be an excuse for AA's lagging performance given that DL and WN both had similar net and operating margins.

LUV's numbers for reference:
Result                2019    2018
Total Revenue ($MM) 22,428  21,965
Operating Margin     13.2%   14.6%
After-Tax Profit     2,300   2,465

Yield (cents)        15.82   15.34
TRASM (cents)        14.26   13.75
Load Factor          83.5%   83.4%
CASM (cents)         12.38   11.74
 
Prost
Posts: 2534
Joined: Wed Oct 03, 2012 6:23 pm

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 6:57 pm

Do we now say the largest US carrier is Delta?
 
ethernal
Posts: 218
Joined: Mon May 06, 2019 12:09 pm

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 7:11 pm

Prost wrote:
Do we now say the largest US carrier is Delta?


You can slice it however you like.

American Airlines is still the world's largest airline by total passengers flown, passenger-miles, fleet size, and US's largest by number of routes.

Delta is the world's largest airline by revenue and profit.

United is the largest passenger airline in the world by destinations served.

I think most shareholders care more about Delta's title, but others would say that fleet size, destinations, or passengers served is a better metric for largest airline.
 
Detroit313
Posts: 434
Joined: Thu Dec 14, 2017 2:56 pm

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 10:47 pm

American Airlines is just hiding profits by purchasing shares and other practices because they are in negotiations with the mechanics, flight attendants and pilots.

It is very easy to cook these numbers.
Last edited by Detroit313 on Fri Jan 24, 2020 10:47 pm, edited 1 time in total.
 
Sancho99504
Posts: 683
Joined: Sun Dec 11, 2005 2:44 pm

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 10:47 pm

ethernal wrote:
Prost wrote:
Do we now say the largest US carrier is Delta?


You can slice it however you like.

American Airlines is still the world's largest airline by total passengers flown, passenger-miles, fleet size, and US's largest by number of routes.

Delta is the world's largest airline by revenue and profit.

United is the largest passenger airline in the world by destinations served.

I think most shareholders care more about Delta's title, but others would say that fleet size, destinations, or passengers served is a better metric for largest airline.

I always liked using RPM's as the basis for largest. Of that were the metric, DL's revenues and profits would be even more impressive. I think that WN's numbers would be equally impressive vs UA and AA, which would be the worldwide leaders in RPMs.
kill 'em all and let God sort 'em out-USMC
 
DLPMMM
Posts: 2276
Joined: Wed Apr 20, 2005 12:34 am

Re: Q4 Earnings Comparison - DL UA AA

Fri Jan 24, 2020 11:28 pm

Detroit313 wrote:
American Airlines is just hiding profits by purchasing shares and other practices because they are in negotiations with the mechanics, flight attendants and pilots.

It is very easy to cook these numbers.


Share repurchases do not affect profits. Share repurchases are done with after tax profits.

Please educate yourself on basic GAAP accounting principals before making such outlandish accusations.

Their profits are lower because of operational and financial decisions by management.

Maybe management needs to go, but AA profits lagging their peers is not related to share repurchases.
 
SESGDL
Posts: 2872
Joined: Sat Jan 13, 2001 6:25 am

Re: Q4 Earnings Comparison - DL UA AA

Sat Jan 25, 2020 7:11 pm

Detroit313 wrote:
American Airlines is just hiding profits by purchasing shares and other practices because they are in negotiations with the mechanics, flight attendants and pilots.

It is very easy to cook these numbers.


This is a baseless, misinformed claim. If AA were found guilty of doing this many people could face lengthy prison sentences. Let’s not make anymore useless assertions for why AA is underperforming; AA has a cost problem, plain and simple. Why are people refusing to acknowledge that?

Jeremy
 
Rdh3e
Posts: 3596
Joined: Wed Mar 30, 2011 2:09 pm

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 12:12 am

Cointrin330 wrote:
Detroit313 wrote:
American Airlines is just hiding profits by purchasing shares and other practices because they are in negotiations with the mechanics, flight attendants and pilots.

It is very easy to cook these numbers.


You have no idea what you're talking about. Share repurchases are made with after tax money.

Actually they are done with cash. Statement of cash flows is totally separate from the income statement. Repurchases do nothing for earnings.

You could say that share repurchases delay the downpayment of debt which adds interest expense which in turn hurts earnings... But even then we are using operating income which does not include that interest and the debt should thus be a tailwind to earnings because AA has a super efficient fleet because of that debt.
 
flyboy80
Posts: 2054
Joined: Fri Jul 13, 2001 8:10 am

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 12:45 am

In regard to contract negotiations, what benefit does share repurchase programs do for AA from a Corporate/Management perspective? They need the investors for obvious business reasons. I've never understood why Delta "set aside" xyz every quarter for Shareholders (repurchases, dividends?) and for Employees (profit sharing) is this a way to appease the work groups? It seems to often peeve the Delta workers- as they feel, despite a many generous profit sharing payouts, that Delta invests much more of that same pie back into investors and shareholders.
 
B757Forever
Posts: 841
Joined: Tue May 04, 2010 3:23 am

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 1:21 am

flyboy80 wrote:
In regard to contract negotiations, what benefit does share repurchase programs do for AA from a Corporate/Management perspective? They need the investors for obvious business reasons. I've never understood why Delta "set aside" xyz every quarter for Shareholders (repurchases, dividends?) and for Employees (profit sharing) is this a way to appease the work groups? It seems to often peeve the Delta workers- as they feel, despite a many generous profit sharing payouts, that Delta invests much more of that same pie back into investors and shareholders.


I don't know any DL employees who feel that way. Have you spoken about this to a broad group of DL employees or just a few?
The Rolls Royce Dart. Noise = Shaft Horsepower.
 
flyboy80
Posts: 2054
Joined: Fri Jul 13, 2001 8:10 am

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 2:04 am

B757Forever wrote:
flyboy80 wrote:
In regard to contract negotiations, what benefit does share repurchase programs do for AA from a Corporate/Management perspective? They need the investors for obvious business reasons. I've never understood why Delta "set aside" xyz every quarter for Shareholders (repurchases, dividends?) and for Employees (profit sharing) is this a way to appease the work groups? It seems to often peeve the Delta workers- as they feel, despite a many generous profit sharing payouts, that Delta invests much more of that same pie back into investors and shareholders.


I don't know any DL employees who feel that way. Have you spoken about this to a broad group of DL employees or just a few?


Yes! Not so much pilots, but I've heard many say their package is under value compared to other pilot groups and that profit sharing is the only part that makes up for the difference. I'm not sure if that's work rules, wide body captain seats, or what the measure of value is- I'm unfamiliar with pilot pay, so I can't say. I seem to remember the last round of negotiations Pilots wanted a significant amount of value put into their contract while keeping the generous profit sharing formula secure as well. And at the same time I believe Delta cut profit sharing for most workers besides the pilots- substituting higher base pay in it's place.
 
Lpbri
Posts: 212
Joined: Tue Sep 27, 2016 7:18 pm

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 6:16 am

It blows me away how DAL can post these profits with their sky high labor costs and bottom of the cellar productivity.
 
majano
Topic Author
Posts: 243
Joined: Sun Oct 14, 2018 10:45 am

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 6:40 am

Lpbri wrote:
It blows me away how DAL can post these profits with their sky high labor costs and bottom of the cellar productivity.

Can you please expand on your assertion about "bottom of the cellar productivity" at Delta? On what basis (metric/s, over which period etc.) did you compare?
 
oschkosch
Posts: 533
Joined: Mon Oct 29, 2018 3:41 pm

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 8:37 am

There is even a wikipedia page regarding largest airlines in the world showing various rankings!

https://en.wikipedia.org/wiki/Largest_a ... _the_world
:stirthepot: :airplane: "This airplane is designed by clowns, who in turn are supervised by monkeys" :airplane: :stirthepot:
 
phatfarmlines
Posts: 1482
Joined: Thu Sep 27, 2001 12:06 pm

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 1:58 pm

seatback wrote:
Thanks for doing this! Two points:

1. Wow. AA has moved to number 2 in revenue.
2. No matter how AA spins their earning release, they're still substantial laggards behind their two biggest peers. Makes me wonder if Doug's job is on the line.


We have to be mindful that AA (and WN) will have a fleet windfall once the MAX's come back online. This combined with the DFW/CLT expansions will likely mean AA getting the #1 revenue spot back, although with lower yields than DL.

For DL to stay ahead as #1 in revenue , they will need some form of aggressive expansion coming.
 
MIflyer12
Posts: 6847
Joined: Mon Feb 18, 2013 11:58 pm

Re: Q4 Earnings Comparison - DL UA AA

Sun Jan 26, 2020 3:07 pm

DL added net 37 aircraft in 2019, even while retiring lots of MD-88s and MD-90s. We'll see the purchase commitments for this year when the annual report comes out in 2-3 weeks. Last year's ann rep called for 67 mainline + 8 CR9s for 2020. There have been posts talking of accelerating deliveries but I don't recall hard numbers coming out of that.

There may be a bunch of AA MAXs awaiting delivery but I question just how many new aircraft AA (or WN) will be able to induct in the remaining months of 2020. During 2018, American took delivery of 23 mainline aircraft and retired 15 mainline aircraft.

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