AA to Pay 30 Cents Less Per Gal of Fuel Than DL/UA in 2015

[WorldTraveler]

fuel prices which AA is benefitting from but which they aren't willing to pass along in benefits to their employees.

either the execs at AA get the increased profits or AA will waste it on developing their Asian route system.

if AA really benefits, it has to show up somewhere to someone's benefit.

 

[jcw]

Back to fuel prices instead of employee pay

The old birds are all getting a second life the challenge is fuel hedging at these low prices is not working either since the hedges remain high

 

[CMH_GSE]

http://www.reuters.com/article/2015/01/16/us-markets-oil-idUSKBN0KP06L20150116

 

[commavia]

http://www.thestreet.com/story/13012551/2/american-air-retains-analyst-backing-despite-rough-start-to-2015.html
 
(emphasis mine)
 

 
[...]
 
"While some may choose to fret over American's relative RASM performance, we suggest focusing on what matters to us: relative profits," Baker wrote. He said American's fourth quarter operating margin, estimated at 13.2%, "is likely to overtake Delta' margin for the first time post-merger, a testament not only to the lack of profit sharing but (to) fuel hedging as well."
 
[...]
 
The carrier benefits "from strong industry fundamentals, structural changes to legacy AMR and merger-related synergies," [McAdoo] wrote this week. "However, more impactful is the substantial decline in jet fuel prices. The full earnings impact of this decline does not appear to be included in the current 2015 consensus estimates."

 

[jimntx]

Yes, but is that AA revenue "quality revenue" like Dullta's or is it just common revenue?

 

[WorldTraveler]

we'll find out in a couple days for DL and a week later for AA.

Given that AA's yield was lower than DL's going into the quarter and AA's guidance indicates that its RASM growth will trail DL's, it isn't likely that AA will pass DL this quarter.

given that this past quarter marks one year since the merger and AA got some nice revenue bumps because of the end of US' aggressive pricing strategies against AA, it is particularly notable that AA is underperforming its competitors even before the 1 year mark of the merger has been reached.


you can characterize that as common or not as you wish.

since we are talking about fuel, it is perhaps more important to talk about when the airlines that have hedged will wash out their hedge losses and when AA will no longer have a fuel advantage.

 

[jcw]

Breaking news - you don't have to wait - anything AA does could not be better than DL and DL will have better than everything in every performance category on the financials