Among the “big three” US carriers — American, Delta, and United — there’s significant variance in terms of profitability. Delta has long been the most profitable, while American has long been the least profitable. United has been transforming itself in recent years, and went from being in American’s league, to being in Delta’s league.
There’s often discussion about all the things that Delta does right, and all the things that American does wrong, given their vastly different financial performance. However, what’s actually driving this difference in performance? Is Delta really transporting passengers that much more profitably, or what’s going on? I think the results might surprise some people…
In this post:
The surprising reality of American vs. Delta vs. United
Looking at full year financial results for 2024, American, Delta, and United:
- American reported operating income of $2.6 billion, and net income of $846 million
- Delta reported operating income of $6.0 billion, and net income to $4.7 billion
- United reported operating income of $5.1 billion, and net income of $4.2 billion
That’s obviously quite a range. I think the average person would assume that this means that Delta transports passengers a lot more profitably than American and United. While this doesn’t tell the full story, I’m a big fan of looking at PRASM, TRASM, and CASM, since it’s a fun, easy thing to compare.
For those not familiar:
- Passenger revenue per available seat mile (PRASM) tells you how much passenger revenue an airline is getting for every seat mile flown, regardless of whether it’s full or not
- Total revenue per available seat mile (TRASM) includes not just the passenger revenue, but also cargo revenue, revenue from ancillaries, etc.
- Cost per available seat mile (CASM) tells you the average cost an airline incurs for each seat mile flown, whether there’s someone in that seat or not
So, how do those numbers compare at American, Delta, and United, for 2024?
Looking at American’s financial results:
- Passenger revenue per available seat mile was 16.93 cents
- Total revenue per available seat mile was 18.51 cents
- Cost per available seat mile was 17.61 cents
Looking at Delta’s financial results:
- Passenger revenue per available seat mile was 17.65 cents
- Total revenue per available seat mile was 21.37 cents
- Cost per available seat mile was 19.3 cents
Looking at United’s financial results:
- Passenger revenue per available seat mile was 16.66 cents
- Total revenue per available seat mile was 18.34 cents
- Cost per available seat mile was 16.7 cents
You’ll probably notice some interesting things here:
- At all three airlines, PRASM is lower than CASM, meaning that airlines aren’t breaking even on their costs exclusively from selling tickets for transporting passengers; United is the closest to breaking even with PRASM vs. CASM
- United has the lowest PRASM, TRASM, and CASM, but that reflects that the airline has a much larger long haul network, where you expect those numbers to be lower; for example, United’s average stage length is 1,475 miles, while American’s is 851 miles
- It’s not surprising to see Delta have the highest CASM, given that the airline has a rather outdated and fuel inefficient fleet, the highest paid employees (on average), and doesn’t operate as many long haul flights as United
- If you take PRASM and compare it to CASM, you’ll find that United has the best performance, followed by American, followed by Delta
- If you take TRASM and compare it to CASM, you’ll find that Delta and United are roughly tied with their performance, and American is way behind
What’s driving the difference in profitability?
Based on 2024 results, United is the closest to directly breaking even on transporting passengers, while Delta is the furthest from breaking even on transporting passengers. So, how is Delta able to be the most profitable airline, despite that reality? And why is American so far behind Delta and United when it comes to profitability?
This is where it’s interesting to dig into other aspects of airline performance. A few things stand out:
- American has the most modern fleet, but that also translates to lots of interest expenses (debt), while Delta (probably smartly) largely flies older aircraft; in 2024, Delta paid $747 million in interest expenses, United paid $1.6 billion, and American paid $1.9 billion
- While American and Delta are largely “up to date” on their labor contracts, United still has a long way to go there, so the airline has significant cost savings from not having finalized contracts with flight attendants, for example, and that will eat into profitability in the future
- Delta is unique among the “big three” US carriers in owning an oil refinery, though the profitability of that varies greatly by year; in 2024, that generated $4.6 billion in revenue
- United has a major advantage with cargo, given how global its route network is; in 2024, United generated around $1.7 billion in revenue from cargo, while American and Delta generated around $800 million each
- Delta is also really good at generating revenue from its loyalty program, including with its co-brand credit card agreement, plus Sky Club access agreement with Amex; in 2024, American generated $6.1 billion in revenue from AAdvantage, while Delta generated $7.4 billion from SkyMiles
What’s my point in saying all of this?
What’s the moral of the story with all of this? After all, it’s the bottom line that counts, and it’s pretty clear who is winning (and losing) there.
My point is simply to point out the complexity of the industry. I’m as guilty of this as anyone, but the reason American is less profitable than Delta and United probably isn’t primarily because it’s less “premium,” and doesn’t have seat back TVs. Instead, there are so many other factors at play.
Ultimately Delta is profitable due to a combination of factors, including that it has less debt than American, it owns an oil refinery, and it generates a killing on its SkyMiles program and its Amex lounge access agreements. Yeah, Delta gets a little more revenue per available seat mile, but it also has higher operating costs, due to having less fuel efficient aircraft, and higher labor costs.
United also has some unique circumstances. Comparing United’s profitability right now really isn’t apples-to-apples, given its labor cost advantages. For the time being, the airline is closest to actually making money transporting passengers, though.
I also think United probably has the most upside with its loyalty program, as the airline increasingly gets a loyal following due to its global route network that’s popular with premium leisure travelers, and increasingly offers elite status for credit card spending, where it lagged American and Delta.
Bottom line
We all know that among the “big three” US carriers, Delta is most profitable, followed by United, followed by American. However, it’s not necessarily exclusively for the reasons that people assume. None of the airlines are particularly good at making money from transporting passengers, but instead, they make money with everything else.
What’s interesting is the relative advantages that each of the airlines have (well, American doesn’t have many advantages, but Delta and United do). Delta has an oil refinery and makes the most with its loyalty program, while United makes the most from cargo, and has a labor advantage, among other things.
What’s your take on the profitability divide between the “big three” US carriers?
I’m willing to pay a premium to be treated as a valued customer rather than the abuse of customers by AA and UA FAs. See the recent article about UA FA refusing to stow an elderly passengers cane and purse in the first class bulkhead, apparently in violation of the ADA laws. Will the FA be prosecuted or terminated for breaking the law? See the posts about AA FAs barricading passengers away from them. Haven’t...
I’m willing to pay a premium to be treated as a valued customer rather than the abuse of customers by AA and UA FAs. See the recent article about UA FA refusing to stow an elderly passengers cane and purse in the first class bulkhead, apparently in violation of the ADA laws. Will the FA be prosecuted or terminated for breaking the law? See the posts about AA FAs barricading passengers away from them. Haven’t seen that about DL. UA and AA seem to be following the Hertz model to have customers arrested and wondering why their profit sharing doesn’t exist.
This analysis is completely flawed.
You need to include loyalty program revenues into the revenues for flying passengers. Don't forget that miles, which is what those revenues represent, are used by their recipients for ... flying.
Also, since CASM includes costs for flying both passengers paying cash and those using miles ("loyalty revenues"). your way of determining profitability is completely flawed: You exclude revenues from a channel used by them to sell their product,...
This analysis is completely flawed.
You need to include loyalty program revenues into the revenues for flying passengers. Don't forget that miles, which is what those revenues represent, are used by their recipients for ... flying.
Also, since CASM includes costs for flying both passengers paying cash and those using miles ("loyalty revenues"). your way of determining profitability is completely flawed: You exclude revenues from a channel used by them to sell their product, loyalty programs, but you include all the costs associated with transporting all passengers, including those using miles).
Wow, Mary, you sure are polite.
Have you washed your vagina lately?
Where on the P/L is this info identified? How is RASM calculated for Loyalty on the balance sheet? That would also equate factoring CASM? How is Loyalty not used for flying accounted for - eg, if used for hotels, etc? As Loyalty has a balance sheet value, what are the implications of large Loyalty balances? How is it factored with the points now being revenue managed?
While working for AA we had American employees but we also had employees that were identified as AirCal, Reno Air and TWA employees and then along comes USAirways with their America West and Piedmont employees. Besides their former airline’s biases they also brought aircraft and hubs that didn’t blend well with what American had and they all brought plenty of debt. Trying to combine all those attitudes, airplanes, hubs, and servicing all that debt, would...
While working for AA we had American employees but we also had employees that were identified as AirCal, Reno Air and TWA employees and then along comes USAirways with their America West and Piedmont employees. Besides their former airline’s biases they also brought aircraft and hubs that didn’t blend well with what American had and they all brought plenty of debt. Trying to combine all those attitudes, airplanes, hubs, and servicing all that debt, would take a top notch management team, and American didn’t and still doesn’t have one. It’s a wonder they ever make a profit.
In the end, should we care about anything other than customer experience or price? If those are acceptable, fine. If not, move on.
Curious why Delta continues to get knocked for it's fleet age. It's definitely got some clunkers hanging around with the 767s and 757s, as well as some old A320s, but I believe Delta's fleet is now younger on average than United's. And trust me I don't love the 767-300, but Delta has done a lot of good work bringing in A321neos, A220s, A339s, and A350s.
@ Sean -- I wasn't attempting to knock Delta regarding fleet age. If anything, my point was that it has helped the carrier keep down its debt, which is good for its bottom line. American has a massive amount of debt, but not much to show for it.
Very true. American's debt-level is scary, without anything to really show for it. Overall I really enjoyed the article.
Just flew a DL A320 in F from the first of the NW days
just wow. what a POS.
Was it Ms Palin that talked about "lipstick on a pig"?
probably because, even if you're on a 30 year old A320, the plane breaks or the "new" interior has air vents that you can push into the ceiling.
Old planes fly fine. But they don't betray their age.
You forgot to mention the B717, the backbone of Delta’s narrow body fleet!
Good analysis and what it shows is there's a whole lot of unprofitable flying which gets made up for in non flying, non core business activities. Revenue streams that have huge profit margins.
Of course that begs the question if those additional revenue streams ever faltered a bit then airlines have the double whammy of a money losing core business and no longer the supplemental non flying revenue. They hit the position that Spirit...
Good analysis and what it shows is there's a whole lot of unprofitable flying which gets made up for in non flying, non core business activities. Revenue streams that have huge profit margins.
Of course that begs the question if those additional revenue streams ever faltered a bit then airlines have the double whammy of a money losing core business and no longer the supplemental non flying revenue. They hit the position that Spirit airlines finds itself in today. Can't ever make a penny flying but doesn't have other revenue to make up for the flying losses.
The rent effects from fortress hubs helps shed some light on this as well. Fortress hubs in Dallas and Charlotte simply aren't going to get you the big-wallet capture that Atlanta and Boston does.
DFW Metroplex GDP ye2023: $744.6 billion.
ATL Metro GDP ye2023: $570.6 billion.
Fortune-500 companies based in metro DFW: 24
Fortune-500 companies based in metro ATL: 16
As such, I'm not really sure how one concludes that having a superhub in DFW somehow puts AA at a disadvantage for "big wallet capture," compared to...
DFW Metroplex GDP ye2023: $744.6 billion.
ATL Metro GDP ye2023: $570.6 billion.
Fortune-500 companies based in metro DFW: 24
Fortune-500 companies based in metro ATL: 16
As such, I'm not really sure how one concludes that having a superhub in DFW somehow puts AA at a disadvantage for "big wallet capture," compared to DL at ATL.....
That, and DL does not have a "fortress hub" at BOS, despite AA having one at CLT. The two aren't really comparable for their place in either airline's network, either.
nice to see someone around here can still post incoherent walls of text peppered with irrelevant statistics out of bitter loyalty to their favorite corporation.
anyway, how about you get back to us with median household incomes and property values?
(1) why do you assume so much more than you know?
(2) you think the number of large corporations (i.e. those who tend to sign exclusive contracts to air carriers for continuous+repetitive revenue flows) is somehow "irrelevant".... but property values, which has zero correlative relationship to airline revenues, isn't? Um, why, exactly? I would certainly be interested to hear the answer to that.
ConcordeBoy, upon information and belief, digital_notmad is a $2-3MM/year data science director at a large tech company. He knows his stuff.
one of the most readily-available proxies for area household accumulated wealth, obviously. do you need your hand held through everything? i am not a licensed caregiver.
Perhaps not. But what you also clearly aren't, is someone who comprehends that popular assumption isn't equivalent to quantifiable fact. Hence item#1 above.
You seem to believe that there's a correlation between property values or "household accumulated wealth" and airfares a/o carrier revenue within a metropolitan area... when there is not.
If there were, then SJC would be the most lucrative market in the country, whn in reality...
Perhaps not. But what you also clearly aren't, is someone who comprehends that popular assumption isn't equivalent to quantifiable fact. Hence item#1 above.
You seem to believe that there's a correlation between property values or "household accumulated wealth" and airfares a/o carrier revenue within a metropolitan area... when there is not.
If there were, then SJC would be the most lucrative market in the country, whn in reality it's actually LOSING carriers on a 5yr basis.
But do go on about "irrelevant statistics."
....can you think of any other reason why it wouldn't make sense to apply that heuristic to SJC as a market? this is very basic stuff and i'm sorry but i don't have time to walk you through each and every one of your misapprehensions.
Curious: do you think you're actually clever, or something?
As in, did you think "...but San Francisco is right there!" wouldn't be an anticipated retort?
To which the response is: even if you combine all metros within a CSA, then your assumption still has no merit, as the Bay area then falls behind...
Curious: do you think you're actually clever, or something?
As in, did you think "...but San Francisco is right there!" wouldn't be an anticipated retort?
To which the response is: even if you combine all metros within a CSA, then your assumption still has no merit, as the Bay area then falls behind Minneapolis/St.Paul and NYC in airline revenue, despite being ahead of both in property value and median household income.
But again, tell us more about "misapprehensions" and "irrelevant statistics". This is fun!
did i claim a 1:1 correlation anywhere in this thread, or did i simply observe that it's a factor that "helps shed light" in addition to the others? you're the one who said it has no correlative value, though i'm glad to see you're rightly backtracking on that claim now.
"did i claim a 1:1 correlation anywhere in this thread, or did i simply observe that it's a factor that "helps shed light" in addition to the others? you're the one who said it has no correlative value, though i'm glad to see you're rightly backtracking on that claim now."
Dude, take the L, you're making a fool of yourself.
take the L indeed: (1) concord claims zero correlative value; (2) concord then bumblingly cherry picks data point, which nevertheless suggests close correlation by concord's own admission; (3) of the three top metros concord references, only 1 is a fortress hub as mentioned in the OP that set concord off, and... it's a DL hub.
great chat!
Yeah the DFW knock is weird, DFW is a great Southern connecting hub with a large O&D basis. Probably one of the top money makers for AA, if not the very top.
CLT on the other hand does pale significantly compared to ATL despite their similar geographies and network positions. What CLT has going for it is low CPE just like ATL, except ATL can command higher fare premiums thanks to its noticeably larger and wealthier population
"CLT on the other hand does pale significantly compared to ATL"
That's an exaggeration. Charlotte isn't Atlanta, and it never will be, but it also doesn't HAVE to be. It's now the third largest hub in the country by departures, and fourth largest by passengers.
Domestically, there's really nothing that Atlanta can do that Charlotte couldn't sufficiently duplicate. Just maybe a smaller gauge or lower frequency count here or there. But the key value...
"CLT on the other hand does pale significantly compared to ATL"
That's an exaggeration. Charlotte isn't Atlanta, and it never will be, but it also doesn't HAVE to be. It's now the third largest hub in the country by departures, and fourth largest by passengers.
Domestically, there's really nothing that Atlanta can do that Charlotte couldn't sufficiently duplicate. Just maybe a smaller gauge or lower frequency count here or there. But the key value is that Charlotte, which hasn't been mentioned, is that for a long time has had cost-per-enplanement of any major hub in the country.
The airport keeps the costs down and American keeps the passenger count up, accounting for that c.p.e. The benefit of that alone can't be overstated.
There is a lot ATL can do that CLT can't, like sustain multiple TPAC flights a day or the dozens more daily TATL volume that ATL handles.
ATL has over 2x the GDP and a much larger population size than CLT. ATL commands far more O&D than CLT.
Because ATL has that much more O&D than CLT, ATL actually attracts foreign carriers despite the megahub status. Afaik, the only foreign carrier operating longhaul services is...
There is a lot ATL can do that CLT can't, like sustain multiple TPAC flights a day or the dozens more daily TATL volume that ATL handles.
ATL has over 2x the GDP and a much larger population size than CLT. ATL commands far more O&D than CLT.
Because ATL has that much more O&D than CLT, ATL actually attracts foreign carriers despite the megahub status. Afaik, the only foreign carrier operating longhaul services is LH at CLT vs ATL having BA, ET, EY, QR, TK, not to mention the myriad of SkyTeam partners. It speaks volumes that not even the Oneworld JV carriers are flying to CLT.
Nothing you said contradicts anything, and in fact only reinforces my point. The similar advantages of the CLT hub are in the low cost and geography, but beyond that it truly cannot compare to ATL, which is exactly what I said originally.
No joke. Don't tell the Delta ATL boys that the city of Atlanta Is inferior to the DFW metro. It seems to hurt their feelings. Could care less but the ATL boys don't seem to know how much the DOJ should investigate their own airline and city.
But, the (dL employees) ATL fanboys seem to love to ignore how much they and the city of Atlanta are a DOJ suit waiting to happen based...
No joke. Don't tell the Delta ATL boys that the city of Atlanta Is inferior to the DFW metro. It seems to hurt their feelings. Could care less but the ATL boys don't seem to know how much the DOJ should investigate their own airline and city.
But, the (dL employees) ATL fanboys seem to love to ignore how much they and the city of Atlanta are a DOJ suit waiting to happen based on their nonsense of buying other airport lands, fake "local we hate new airports" citizen funds from Delta-only.
If anyone in Atlanta was smart enough, they'd elect someone that cared about not being a corporate puppet for high fares out of ATL. DL isn't going to leave ATL, Atlanta voters. ;) They can threaten you a lot. But they NEVER will Leave ATL.
But you CAN elect a mayor that stops trying to prevent new airports to allow you to have better options and airfares. You're the largest city paying what you do for airfare due to your city's collusion with a company, Delta.
Some people need to stick to their day job of office tea boy. Banging out comments on their burner phone, to be posted herein for everyone’s amusement is not fooling anyone …. Arps.
Blow! What I failed to post was that I found the article very informative Ben, thank you.
Delta makes more money off of its credit cards + frequent flyer program than American, even though American offers more award seats for fewer miles, precisely because people want to fly Delta!
☝️
This is why Delta replaced SkyMiles with the SkyPesos program. It did so because it could.
United has the best routes and hub locations for international flights, though DL has a huge fortress at ATL as does AA at DFW. All 3 are very similar for domestic flights, though I put AA as slightly inferior.
super interesting numbers regarding loyalty revenue. the fact that Delta makes over 1B more from its loyalty program compared to American, when AA miles are worth 2x as much as Delta miles is so funny. Branding is everything I guess and Delta has done a good job there with the whole "premium" schtick
I don't think that's fair. The majority of people purchasing tickets do not care about miles earning and miles redemption rates/opportunities, so the increased value of AA miles is only relevant to us points nerds (and, even for us points nerds, it's typically better to generate those miles via CC spend than step foot on AA metal).
Delta and United in general have a higher standard of service/product than American, it really is that simple....
I don't think that's fair. The majority of people purchasing tickets do not care about miles earning and miles redemption rates/opportunities, so the increased value of AA miles is only relevant to us points nerds (and, even for us points nerds, it's typically better to generate those miles via CC spend than step foot on AA metal).
Delta and United in general have a higher standard of service/product than American, it really is that simple. Is the DL margin a bit exaggerated? Absolutely. But the margin between [Delta & United] vs American is substantial. You do not have to fly business with regularity to appreciate that.
I can send my grandmother on a Delta One Suite or a Polaris business ticket and be reasonably assured she’ll have as premium of an experience as she can get on a US carrier for a domestic transcon.
If I book her on AA Flagship Business, and she mistakenly tries to enter the Chelsea lounge because a sign demarcating eligible pax says “Flagship Business Plus” (great branding AA morons) implies she may enter, and...
I can send my grandmother on a Delta One Suite or a Polaris business ticket and be reasonably assured she’ll have as premium of an experience as she can get on a US carrier for a domestic transcon.
If I book her on AA Flagship Business, and she mistakenly tries to enter the Chelsea lounge because a sign demarcating eligible pax says “Flagship Business Plus” (great branding AA morons) implies she may enter, and she asks the receptionist politely for entry, I can’t guarantee that the receptionist will be a non-asshole. The born-and-raised Queens loser (because he grew up so close to Manhattan yet couldn’t manage to get any halfway decent job in the city) has a chance of power-tripping while he turns her away to Greenwich.
That’s driving the profitability difference
No, it isn't, as Ben very methodically laid out in his post.
:/
How much do your clients pay you for your advice, snic? Do you have any clients at all?
How much do my clients pay me? Enough to take a draw of $6MM/year. I take only the best clients who can afford high fees.
So which one of us do you think has more intelligence?
This makes 0 sense - the Polaris passenger will not have access to a Polaris lounge for a domestic trancon. The Greenwich Lounge is superior to a basic United Club let alone the Chelsea Lounge which is a world away.
Delta One is a different argument, but LOL that you're acting that the Delta One Suite product is a premium product. Most of Delta's transcon flights have a very outdated, subpar business product, and it...
This makes 0 sense - the Polaris passenger will not have access to a Polaris lounge for a domestic trancon. The Greenwich Lounge is superior to a basic United Club let alone the Chelsea Lounge which is a world away.
Delta One is a different argument, but LOL that you're acting that the Delta One Suite product is a premium product. Most of Delta's transcon flights have a very outdated, subpar business product, and it will remain this way until DL's new reconfigured A321's for transcon flights. Now credit due where it's deserved the new Delta One lounges are very nice.
Jeremy, you're obviously not Jeremy the managing partner of top-tier law firm Skadden Arps, because what you've harped on is irrelevant detail which makes you completely stupid and obviously not a lawyer
Arps, there is nothing which you can say which will allow the readership to believe that you are anything more than the office tea boy.
That's because domestic transcons are marketed as United Business and not Polaris, even if they reuse the same hard product.
I have to agree with Jeremy. I've been on Delta One domestic and... sure, it was lie flat, but it wasn't wide-body lie flat.
Arps is correct. I would never book my grandma for a transcon business class on AA; I wouldn't trust them not to screw up or her having a bad experience.
Life's too short, so I no longer book myself on it either.
And AA lounge branding is confusing as heck. Complete morons indeed.
Is Arps a reincarnation of Endre? The one who only flies paid business/first on one world carriers