How did US airlines make in the first quarter of 2019?
We are now well into the second quarter, and almost all US airlines have revealed first-quarter results and have had earnings conversations. Sometimes it is interesting to look at the state of the United States airline and how the airlines do.
This is not meant to be a deep dive in US airline finance, but a big picture of how the airlines are doing relatively, across a number of factors.
Remember that different airlines have handled various challenges, from 737 MAX ground connections, to major weather conditions, to government closure, and the impact of these issues has varied by carrier.
Comparison of net income for major US airlines
Let's take a quick look at reported first-quarter net income for major US airlines:
- Delta ̵[ads1]1; $ 730 million
- Southwest – $ 387 million
- United – $ 292 million
- American – $ 185 million
- Allegiant – $ 57 million
- Spirit – $ 56 million
- JetBlue – $ 42 million
- Hawaiian – $ 36 million
- Alaska – $ 4 million
Comparison of operating margins for May or US airlines
How do the operating margins of the major US airlines compare (operating income divided by revenues)?
- Allegiant – 20.2% (91.1 million divided by 451.6 million)
- Spirit – 10.3% (87.8 million divided by 855.8 million)
- Southwest – 9.8 % (505 million divided by 5.1 billion)
- Delta – 9.7% (1.02 billion divisions of 10.472 billion)
- Hawaiian – 8% (52.676 million divided by 656.751 million)
- United – 5.2% (495 million divided into 9,589 billion)
- JetBlue – 4.1% (76 million divided by 1.871 billion)
- US – 3.5% (375 million divisions of 10.584 billion)
- Alaska – 1.3% (25 million distributed over 1.876 billion)
Some interesting trends
I let everyone draw their conclusions from the statistics above.
Since he is so vocal about how well the airline is going to continue, I think it's worth reminding everyone of US CEO Doug Parker's 2017 comments:
- American Airlines will never lose money again
- American Airlines will achieve average $ 5 billion in pre-tax profits a year ahead
- In good years, US could reach $ 7 billion in pre-tax profits
- Over the years, Americans would probably "only" achieve $ 3 billion before tax.
- He feels that the American's "warehouse is so undervalued that it challenges logic".
So Americans have some concern to do! Quarter after quarter it seems that logic is only challenged!
As pointed out by View from the Wing, it is interesting to compare PRASM and CASM with airlines. PRASM is the "passenger revenue per vacant seat environment", while CASM is "cost per available seatmile." US first quarter PRASM was 14.49 cents, while CASM was 15.31 cents. In other words, the American lost 0.82 cents for every seated mile offered.
This does not take into account cargo revenue, but even when you add it, the Americans still didn't make money.
Rather, their) profits come from "other income" US received, which amounted to $ 708 million. This includes AAdvantage and other partnerships.
As a comparison point, the Other's CASM was 7.81 cents, while their TRASM (total revenue per available seat environment) was 8.71 cents.
Bottom line
It is interesting to see how different US airlines did in the first quarter. As I said at the beginning, this does not paint a full picture, as different airlines faced different challenges in the first quarter.
But the overall and consistent trends we see are valid – Delta continues to surpass other legacies, US continues to lose money that actually flies aircraft, and Alaska has not been Wall Street poster children as they were before they took over Virgin America.
Are there any results here that surprise you?
