WN financials hit headwinds

[BoeingBoy]

WN doesn't have a CASM or RASM advantage relative to its network peers - and it has showed up in WN's financials for several quarters... now that another quarter has closed and another is opening, we'll see how quickly WN is adapting.

So you're saying that WN's CASM is as high or higher than all the network carriers? I think you're badly mistaken, even more so when one considers the express-type ops that are part of every one of those network carriers, but don't feel up to sorting through SEC statements for the last few quarters right now, but here are the numbers for WN/FL vs US vs USX.

3RD QTR
CASM: WN/FL = 12.26 cents, US = 12.93 cents, USX = 22.29 cents
RASM: WN/FL = 12.94 cents, US = 11.91 cents, USX = 22.35 cents, US/USX = 15.21 cents

2ND QTR
CASM: WN/FL = 12.49 cents, US = 13.15 cents, USX = 22.01 cents
RASM: WN/FL = 13.15 cents, US = 11.93 cents, USX = 22.65 cents, US/USX = 15.36 cents

1ST QTR
CASM: WN = 12.20 cents, US = 13.09 cents, USX = 22.06 cents
RASM: WN = 12.66 cents, US = 11.15 cents, USX = 19.06 cents, US/USX = 14.42 cents

Looks to me like WN or WN/FL has consistently lower CASM than US mainline (US consolidated would need to be calculated), while also having higher RASM than than US mainline.

Jim

 

[BoeingBoy]

Here are the other bigger network carriers in the same order - 3rd qtr, 2nd qtr, 1st qtr

CASM:
AA = 13.93 cents, AA/AAX = ??.?? cents
AA = 13.85 cents, AA/AAX = ??.?? cents
AA = 12.78 cents, AA/AAX = ??.?? cents
DL = 13.13 cents, DL/DLX = 14.16 cents
DL = 13.29 cents, DL/DLX = 14.42 cents
DL = 11.82 cents, DL/DLX = 12.83 cents
UA = 13.05 cents, US/UAX = 13.86 cents
UA = ??.?? cents, UA/UAX = 14.18 cents
UA = ??.?? cents, UA/UAX = 14.01 cents (PMUA)
RASM:
AA = ??.?? cents, AA/AAX = ??.?? cents
AA = ??.?? cents, AA/AAX = ??.?? cents
AA = ??.?? cents, AA/AAX = ??.?? cents
DL = ??.?? cents, DL/DLX = ??.?? cents
DL = ??.?? cents, DL/DLX = ??.?? cents
DL = ??.?? cents, DL/DLX = ??.?? cents
UA = ??.?? cents, UA/UAX = ??.?? cents
UA = ??.?? cents, UA/UAX = ??.?? cents
UA = ??.?? cents, UA/UAX = ??.?? cents

As you can see, of those that reported mainline CASM, only DL - for 1 quarter - was lower. Of those that reported mainline/express combined CASM, not was as low as WN. Also note that this is before any stage length adjustment, which would give WN an even larger advantage in CASM.

As you can also see, nobody except US, reported RASM either as mainline only or mainline/express consolidated. I would stipulate, however, that the network carriers generally have higher RASM than WN - especially if express is included. WN doesn't have high CASM RJ's and hub/spoke ops to support so doesn't need to charge as much as the network carriers to break even. While that does mean that there are markets that WN will probably never serve, it isn't a weakness of WN's model as much as it is an expense of the network model. An expense that must be supported by higher average fares and why WN is on the verge of becoming once again the largest U.S. carrier while making profits doing it.

Jim

 

[WorldTraveler]

the fact that any network/legacy carrier has managed to have a CASM lower than WN at any time is reason enough for WN to be concerned... and that is exactly how WN mgmt has responded.. they know they need to get their costs down... but it will be very difficult to do so given that WN's ability to control costs has been driven by growth, something which WN is not doing... and other carriers continue to cut their own costs.
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Yes, other carriers have higher CASM RJ operations, but they obviously are able to generate higher revenues based on those costs - because they are generating larger profits.
A number of people argued in the discussion about US vs NK that the strategy a company pursues should generate financial results that match the level of costs associated with the business strategy - and I couldn't agree more. That means that WN has to deliver financial results comparable to network carriers using the strategy that each has adopted.
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We are a couple weeks away from the release of the December quarter financials so we can see who is doing what and how WN's financials compare to the industry.

 

[BoeingBoy]

WN had good non-fuel cost control but it also generated passenger RASM improvements of just 1.6%... what will clearly be one of the weakest showings in the industry for the quarter.

The primary story is that WN is NOT generating RASM growth anywhere close to what it once did.

WN doesn't have a CASM or RASM advantage relative to its network peers - and it has showed up in WN's financials for several quarters...

the fact that any network/legacy carrier has managed to have a CASM lower than WN at any time is reason enough for WN to be concerned...

Well, you've managed to go from WN being at a financial disadvantage, to WN having a CASM/RASM disadvantage, to any network carrier beating WN on one measurement for one quarter spelling doom and gloom for WN. Did you happen to notice that the quarter DL had lower CASM than WN was the quarter the FL acquisition closed?

Keep on wearing those tap shoes...or you could just admit that you were wrong...

Jim

 

[does this plane go to paris]

Well, you've managed to go from WN being at a financial disadvantage, to WN having a CASM/RASM disadvantage, to any network carrier beating WN on one measurement for one quarter spelling doom and gloom for WN. Did you happen to notice that the quarter DL had lower CASM than WN was the quarter the FL acquisition closed?

Keep on wearing those tap shoes...or you could just admit that you were wrong...

Jim

Jim, I have found your posts entertaining and I applaud you for pointing out the man behind the curtain. It's been a good Christmas/New Year's present. Thanks.

 

[WorldTraveler]

Well, you've managed to go from WN being at a financial disadvantage, to WN having a CASM/RASM disadvantage, to any network carrier beating WN on one measurement for one quarter spelling doom and gloom for WN. Did you happen to notice that the quarter DL had lower CASM than WN was the quarter the FL acquisition closed?

Keep on wearing those tap shoes...or you could just admit that you were wrong...

Jim

Polish the glasses, Jim. I said that if ANY (which means even one) network carrier has a CASM advantage to WN for even one reporting period, WN should be concerned.
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I don't really care what caused WN's CASM to go up and neither do WN's competitors... if they have an advantage, they will use it. WN chose to acquire another carrier.
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But while you are at it, why don't you let us know how much of WN's CASM they attribute to merger related costs, esp. since they haven't really started the heavy lifting of consolidating operations - which is what creates extra expenses.
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Once again, we will see in a couple weeks how things are changing....
While you, Jim, seem to think you have to argue as if to prove you are right, WN mgmt DOES realize they have a problem and they are addressing. The contents of their letter to their employees can be found on the AA forum...

 

[BoeingBoy]

Polish the glasses, Jim. I said that if ANY (which means even one) network carrier has a CASM advantage to WN for even one reporting period, WN should be concerned.

Yes, after saying several things that aren't true, you tap danced your way to that statement. Hoping everyone will forget the "it generated RASM improvements of only 1.6%" (apples to oranges) and the "WN doesn't have a CASM or RASM advantage relative to its network peers" (note the "peers" plural making it false). What was it you said about those who tap dance around an issue changing their story until they can claim to be right while avoiding mention of erroneous statements...

Jim

 

[WorldTraveler]

Yes, after saying several things that aren't true, you tap danced your way to that statement. Hoping everyone will forget the "it generated RASM improvements of only 1.6%" (apples to oranges) and the "WN doesn't have a CASM or RASM advantage relative to its network peers" (note the "peers" plural making it false). What was it you said about those who tap dance around an issue changing their story until they can claim to be right while avoiding mention of erroneous statements...

Jim

no, Jim, you are the one who obviously can't find anything else to do but argue.
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My statements are completely accurate... you are the one that keeps looking for every opportunity to find fault - since you have clearly stated that you won't be proven wrong by me. Truth apparently is apparently inconsequential to you if your pride can remain intact.

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WN's RASM underperformed the entire network carrier segment of the industry which constitutes a plurality of airlines.
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You do know the story about the plank and the speck in the eye, Jim, don't you?

 

[BoeingBoy]

My statements are completely accurate...

 

[does this plane go to paris]

Jim,

The last post you made had a really "kewl" icon. After today's 4th quarter, end of year announcement today by WN, I'm sure that someone here will argue how much trouble WN is in and that it's only good news for DL. Have you found new laughing face's to repute the naysayers?

 

[jimntx]

Now, now boys. I think WT's continuous cheerleading for DL is kind of cute. (I bet he's a doll in that little short skirt and pom poms.) It's like that American6 we are plagued with on the AA board. Everything DL does is right, good, loyal to the Boy Scout code, and profitable. Anything WN does spells its imminent doom. Can't you keep that straight?

I remember 40 years ago when the airline experts--at Braniff, Trans-Texas, and Continental--said that WN wouldn't last a year flying only between DAL and HOU and SAT. "There is no money to be made on those routes--particularly with the frequency that WN is planning--or we would already be offering that service." (Oddly enough, even though they knew WN wouldn't survive, they went to court to try to stop it from even taking off the first time. I wonder why.)

 

[num1bearsfan]

39 years of consecutive profitability and ended the quarter with an extra $66 million in the bank.. Is it time to abandon ship yet?

 

[jimntx]

Well, there you have it. Only $66 million! No real airline could possibly survive on that. That won't even pay the executive bonusses. Doom is imminent.

 

[BoeingBoy]

Well, there you have it. Only $66 million!

Blame that on the fuel hedges. The one's that lost value when marked to market earlier provided a positive special item in the latest quarter. Taking those out deflated the net profit excluding special items to "only" $66 million (beating the consensus). In the spirit of "hedges count when they hurt profits, the net profit was $152 million.

Jim

 

[jimntx]

Here's a link to the ghastly news. Repent! The End is Near! Obviously, all WN employees should be scrambling for other jobs.


Click here for the bad news