Earnings

[vantheman63]

Did you see Dougie on CNBC this morning? He admitted that the profits were a result of industry capacity reductions and the resulting fare increases...nothing he did.

This is exactly what I said the result would be in the other thread discussing what the profits would be. I also said in my post to "peel the numbers back" to get an understanding of where things are going.

Yields - Those number should be in the report - How do they compare with past quarters and years?
CASMs - Those numbers should be in the report - Same thing, how do they compare? It's VERY expensive to run an airline that is as operationally challenged as this one.
Channel Flow - This on won't be in the report...but they should know it..."where is the income flowing in from? Direct sales via the web site? Consolidators? And what does the channel flow look like now compared to last quarer? Compared to last year?

I don't trust management, or anything that comes from this airline, do you blame me?

That why it helps to be from Missouri, "The Show Me State." Every time I hear "Elite travelers haven't left and we have more of them" I just wanna say, "show me those figures, show me how you came up with them and tell me how many actually earned it year over year vs. how many people bought or are on trial...year over year."

Its always important to remember, these reports are scripted as much for investors (in this management team's case, more so) then it is for employees or anyone else.

 

[gaucho99]

What is the methodology LCC uses to determine profit-sharing for its employees? At Delta, its 15% of the first $1.5 billion, and 20% for anything over that. (Delta has never made more than $1.2 billion profit in a full fiscal year, so don't count on seeing that 20% any time soon) Thus far, Delta has accrued $160 million for profit-sharing. Also, the money isn't dispersed equally amongst employees, rather, its based on last years W-2 final earnings. Is this how it works at LCC?

I beleive 10 percent of the annual profit is allocated for profit sharing. They have a formula to divide it up amongst the different work groups. Some groups like the pilots get a higher piece than others. Then, among your work group, it is divided by your W-2.

 

[JetMonkey]

Congrats to USAir on the return of profits despite record high fuel prices. Sorry everyone had to give up multiple rounds of paycuts and pension terminations in multiple bankruptcies to get there.

Piney: The US mainline yield is catching up to AA's yield; in fact, everyone's mainline yield is finally catching up to AA's. Problem at AA is its higher expenses (since it didn't discharge its unsecured debt and didn't walk away from its pilot pensions). The formerly bankrupt airlines have shown tremendous revenue gains (percentage wise) the last few quarters. About time, since they were all showing yields and unit revenue well below that at AA. AA's yield fell in 2001 and 2002 but not as far as the bankrupt airlines - their yield fell more, perhaps because of the book-away syndrome that most Ch 11 airlines face.

I'll let someone else tackle labor cost comparisons but I don't think US is as low as management would like.

Even though we may be catching up to AA's yeild, which I doubt we'll ever exceed, they control their expenses better than US. That's because we have always done it on the cheap, not the most effiecient. And BTW it's "US Airways" now, not USAir.

Autofixer-- well that's about a usual response from that guy, there's no pleasing him. Who knows what he did with all his money during those 18 years.

 

[FWAAA]

Even though we may be catching up to AA's yeild, which I doubt we'll ever exceed, they control their expenses better than US. That's because we have always done it on the cheap, not the most effiecient. And BTW it's "US Airways" now, not USAir.

Good point - consistent with knowing the "price of everything, value of nothing," that we've seen here before?

It'll always be USAir to me. USAir had a modern sound. USAirways sounds decidedly old-fashioned. After all, American AIRWAYS changed its name to American Airlines in 1934.

 

[avion]

a profit is still a profit but can you imagine how much we could be making if operationally we ran a good operation . we all know we knew a workover our international product needs to be upgraded and they say they are doing it too bad they did not have a plan this past summer when people went to Europe in droves the clubs need to be cleaned up there is a seperate post on the club decor issues well remember after 9/11 when US decided to use 9/11 as an excuse to cut back further and one of the those things were the Clubs the one in CLT concourse D was turned into a training room man when you went in there and saw the paint peeling and the soot in the ceilings and the furniture man it was an eye opener so HP inherited that but back to the profit thing they need to start using cash to upgrade the service the company wants to keep as much as possible in the bank when the recession does arrive and need to weather the big time bumps that will be coming up but you know if the flying public will put up with sub standard airline service which i did not come up with that came from the US CEO and pay the right PRICE we should be fine. all this profit sharing thing... yeah right. its the money the company took from the EAST and its OUR money the money and benefits we gave up. we make money now because it comes off the backs of the employees who gave up so much to make a once proud airline declare profits today and im very please we are making the cash and i know i join thousands of employees yeah we have issues but you know we come to work and do our best with the tools given to us . you cant blame us when things operationally turn the wrong way . none of us wakes up in the morning and the first thing that comes to mind is .. How can i make some customers life miserable and i hope my day is full of delays and cancellations... i would like to think that the BOD sees what we do and appreciates it and i dont have to feel that myself or my co workers are just pawns in a chess game. Im very pleased about the profit thing just wish we ran a better company we could have made so much more and more in our profit sharing program.

 

[pilot]

Clearly you live in the past. You dwell on negativity, distrust, blame, loss, victim and you have this "poor me" attitude about life.
If you can't change your outlook in life and focus more on hope, faith and be more optimistic about your future, you wouldn't attract the next shoe to drop. You'll just attract more tragedy, misfortune, suffering if you focus your energy on that!

If you are so unhappy about your current situation, change it. If you don't want to change and unhappy about your life, it's time to leave and move on.

You'll never see progress, if you are stuck in the past.

Those who don't learn from the past are doomed to repeat it. Many of us, apparently not you, have given enormous amounts of things to keep this company afloat. Now we see record profits being made with a management who has no operational or customer skill. In other words they are making money simply because of the givebacks in spite of the pathetic operation they are running.

Progress is when a management changes things for the better. They owe us that. We kept it afloat and they owe us competent management so that we can survive and prosper in the bad times. Not just make money during the good times. Can your honestly say you are optimistic about the future of this company the way it is being run? These profits are not true profits. They are hiding the incompetence and true problems of what is going on here.

Stuck in the past? My God! If you cannot see what this airline has become and where it is headed you must be blind. We need someone here who can run an airline. Not someone who just keeps it alive for the next merger which may or may not happen.

 

[autofixer]

Clearly you live in the past. You dwell on negativity, distrust, blame, loss, victim and you have this "poor me" attitude about life.
If you can't change your outlook in life and focus more on hope, faith and be more optimistic about your future, you wouldn't attract the next shoe to drop. You'll just attract more tragedy, misfortune, suffering if you focus your energy on that!

If you are so unhappy about your current situation, change it. If you don't want to change and unhappy about your life, it's time to leave and move on.

You'll never see progress, if you are stuck in the past.

No. I am here for the duration. This company is going to reap what it has sown, with regard to me. Unlike management, I have spent many years at this company, shedding my blood, sweat, tears and my family's financial future and I have the right to say what I want with regard to this place. This management is lousy, the economy is getting lousy and nothing anyone says will change that. I have operated and sold my own business. I know what it takes to run a business and I will most likely do it again (maybe after this dump finally closes). I am fortunate to know that I can survive outside of this company. I am still here to stick as many sticks in the eyes of management as I can. I actually am enjoying life in a contrarian kind of way.

Happy profit day anyway!

 

[BoeingBoy]

Mainline yield and CASM:

Airline / 3Q07 Yield / 3Q06 Yield / % Chg YoY
AA / 13.09 / 12.80 / +2.27%
CO / 12.84 / 12.34 / +4.05%
DL / (did not break out mainline yield - consolidated was up 2.56%)
US / 13.01 / 12.86 / +1.17%
NW / (hasn't reported yet)
UA / 13.73 / 12.58 / +9.14%
WN / 12.61 / 12.71 / -0.79%

Airline / 3Q07 CASM / 3Q06 CASM / % Chg YoY
AA / 11.17 / 10.90 / +2.48%
CO / 10.85 / 10.52 / +3.14%
DL / 10.13 / 10.16 / -0.30 % (could be BK related factors in 06 number)
US / 11.11 / 11.40 / -2.54%
NW / (hasn't reported yet)
UA / 11.28 / 11.13 / +1.35%
WN / 9.01 / 8.80 / +2.39%

Jim

 

[BoeingBoy]

I beleive 10 percent of the annual profit is allocated for profit sharing.

Correct up to $1 billion (annual operating profit before special items), then 15% of anything over $1 billion.

Jim

 

[vantheman63]

Those who don't learn from the past are doomed to repeat it. Many of us, apparently not you, have given enormous amounts of things to keep this company afloat. Now we see record profits being made with a management who has no operational or customer skill. In other words they are making money simply because of the givebacks in spite of the pathetic operation they are running.

Progress is when a management changes things for the better. They owe us that. We kept it afloat and they owe us competent management so that we can survive and prosper in the bad times. Not just make money during the good times. Can your honestly say you are optimistic about the future of this company the way it is being run? These profits are not true profits. They are hiding the incompetence and true problems of what is going on here.

Stuck in the past? My God! If you cannot see what this airline has become and where it is headed you must be blind. We need someone here who can run an airline. Not someone who just keeps it alive for the next merger which may or may not happen.

I can't think of a better way to say this....VERY well stated. EXACTLY right.

 

[CynicalResAgent]

Thanks BB for those numbers. The CASM for US decreased slightly from 2006 to 2007. Is it likely that US will see more cost reductions if they were to get combined labor agreements, thus more synergies? Or is the CASM pretty much as low as it will go unless they shrink mainline down more? Would the increased EMB-190,175,170 flying and decreased 50 seat RJ decrease the CASM or are the number not including express and just inclusive to mainline flying?

 

[legacy-to-LCC]

Mainline yield and CASM:

Airline / 3Q07 Yield / 3Q06 Yield / % Chg YoY
AA / 13.09 / 12.80 / +2.27%
CO / 12.84 / 12.34 / +4.05%
DL / (did not break out mainline yield - consolidated was up 2.56%)
US / 13.01 / 12.86 / +1.17%
NW / (hasn't reported yet)
UA / 13.73 / 12.58 / +9.14%
WN / 12.61 / 12.71 / -0.79%

Airline / 3Q07 CASM / 3Q06 CASM / % Chg YoY
AA / 11.17 / 10.90 / +2.48%
CO / 10.85 / 10.52 / +3.14%
DL / 10.13 / 10.16 / -0.30 % (could be BK related factors in 06 number)
US / 11.11 / 11.40 / -2.54%
NW / (hasn't reported yet)
UA / 11.28 / 11.13 / +1.35%
WN / 9.01 / 8.80 / +2.39%

Jim

for the business jargon iliterate, could you offer a primer on CASM, RASM(?), Yield (as it relates to the identified %s)?

 

[vantheman63]

for the business jargon iliterate, could you offer a primer on CASM, RASM(?), Yield (as it relates to the identified %s)?

Here's what these numbers say to me....in the simplest terms....

WN had an actual DECREASE in yield...that is, the overall "profitability" of the product they sell. US had the next lowest increase in yield, or "profitability" for the actual product. UA and CO increased their "profitability." UA REALLY saw good increases, meaning people are paying more for their product.

An increase in yield would mean that pax are paying more this quarter then in the 2 Qtr '06. The goal, if you are branding and selling your product is to increase your yield...increase your profitability.

WN has come out and publicly acknowledged they have "issues." Those issues are that the legacies have all gotten their costs down to a more comptetive level...WN use to be able to run circles around everyone bacause (a.) they have VERY low costs relative to everyone else and (b.) because they have hardly any debt.

As for CASM, "Cost per Available Seat Mile".....

US actually had the best performance here...reducing costs.

At first glance, it might be easy to say "CO had the worst performance" except for one thing: They increased their profitability as per the increase in Yield.

Therefore, the real loser here is WN...they increased their CASMs and had lower profitability on those seats. Not good...hence, they have issues.

The winner here would be UA which saw significant increase in yield...and a smaller increase in costs. You do that ALL day long if you can leverage it...from a business stand point.

Based on UA's new balance sheet....if they can put several quarters together like that, where they can REALLY increased yield and manage to grow their CASMs as a fraction of that...they would be the force to reckon with down the line.

US, from my vantage point, is still lacking "positioning" in the market place...."what is US?"

WN has issues...which is why they are trying new boarding procedures, etc. Sitting still will be problematic for them.

If the big boys, CO, UA and other can increase profitability, they will continue investing into their product and they will pull away from the pack.

The next numbers to really look at are "where is the revenue coming from as it relates to their various channels." I listened to the conference call....one person got close to asking the question correctly...but didn't quite do it. They asked "in the T/A and domestic channels, where was the growth?"

If I heard correctly, the T/A was not the biggest growth...which swims completely counter to the rest of the industry. If I heard Mr. Parker correctly, he acknowledge, in great part, it was because the company ran an AWFUL T/A operation...

NO ONE that is a true international carrier is growing domestically...they are growing internationally.

 

[BoeingBoy]

The CASM for US decreased slightly from 2006 to 2007.

I noticed one big factor - fuel hedging. In 3Q06, US reported a loss of 0.44 cents/seat mile for hedging while in 3Q07 it was a gain of 0.17 cents/seat mile. That alone is a change of 0.61 cents/seat mile in CASM - more than double the actual CASM change. In other words, excluding the hedging difference CASM would have increased.

Is it likely that US will see more cost reductions if they were to get combined labor agreements, thus more synergies?

Depends on the cost of getting the combined agreements vs the savings from the synergies of having truly combined ops.

Or is the CASM pretty much as low as it will go unless they shrink mainline down more? Would the increased EMB-190,175,170 flying and decreased 50 seat RJ decrease the CASM or are the number not including express and just inclusive to mainline flying?

Those numbers I posted are just mainline. On a consolidated basis, increasing the average size of the planes in the Express fleet should lower Express CASM - the old rule of thumb that a bigger airplane is cheaper to operate on a per seat mile basis. Plus new airplanes are generally cheaper to operate than old airplanes - the so-called "maintenance holiday" before heavy checks are due is one of the reasons.

Shrinking mainline by reducing fleet count and ASM's would generally increase CASM since expenses generally don't come down as much as capacity. However, shrinking the fleet while maintaining ASM's should lower CASM. Replacing larger/older airplanes with smaller/new ones (190's replacing 737's) is probably something of a wash.

for the business jargon iliterate, could you offer a primer on CASM, RASM(?), Yield (as it relates to the identified %s)?

ASM = Available Seat Miles. The total of the seats we flew on revenue flights times the mileage of those flights - a 100 seat aircraft flown 1000 miles produces 100,000 ASM's. In the passenger airline business, ASM's are the units of production.

RPM's = Revenue Passenger Miles. How many total miles revenue passengers flew during the period. It's basically the number of ASM's that were bought - how many 'units' produced were sold.

CASM = Cost per Available Seat Mile. Generally, total operating cost divided by total available seat miles. It's basically what it costs an airline to fly 1 ASM, or how much each 'unit' of production costs to produce.

Yield = the average paid by passengers to fly one mile. Generally, passenger revenue divided by RPM's for the period. It's affected not only by the fare structure (the range of fares offered) but also by the mix of fares sold (how many higher fares vs lower fares are sold)

RASM = Revenue per Available Seat Mile. In the broadest sense, operating revenue divided by ASM's. However, passenger airlines generally report passenger RASM which is passenger revenue divided by ASM's. This is the revenue counterpart to CASM on the cost side. CASM tells you how much it cost to produce each 'unit' and RASM tells you how much revenue you received per 'unit' produced. RASM is affected by two things - yield (higher fares raise the average) and load factor (more seats filled even at the same fare raises the
average).

I'll throw in Load Factor, since it's generally misunderstood slightly. Most people think of LF as the percentage of seats filled, but it's actually RPM's divided by ASM's - total miles revenue passengers flew in the period divided by total available seat miles. For an airline of any size at all, it's generally so close to percentage of seats filled that it's not worth worrying about the difference.

Jim

 

[ggiby]

Let's see LCC-Stew: Lost my retirement, after 18 years of service. Lost 40% of my pay, after 18 years of service. Lost 17 years of seniority , after 20 years of service. I am always looking for the next shoe to drop and I see it coming, that's all. Go ahead, bury your head in the sand. The clouds are building, there is a storm coming.

I don't trust management, or anything that comes from this airline, do you blame me?

HPearlyretiree (nice): Did you see Dougie on CNBC this morning? He admitted that the profits were a result of industry capacity reductions and the resulting fare increases...nothing he did. "A rising tide floats all ships." It is obvious from this interview he has no plan, short term or long term. He is totally dependant on industry trends, "the trend is his friend".

Ok...

so Quit...

U live in a free world...

if you don't like this place ....leave...

good luck to you...
go away... get a new job.... hope you get a raise...

go away... i am so tired of lousy attitudes....


again...

go away...

bye bye now...