We’re now well into the second quarter, and almost all US airlines have revealed their first quarter results, and have had their earnings calls. Sometimes it’s interesting to take a look at the state of the US airline industry, and how airlines are doing.
This isn’t intended to be a deep dive into US airline financials, but rather a big-picture look at how airlines are doing comparatively, across a variety of factors.
Keep in mind that different airlines have dealt with different challenges, from 737 MAX groundings, to major weather, to the government shutdown, and the impact of those issues have varied by carrier.
Comparing net income for major US airlines
Let’s take a quick look at reported net income for the first quarter for major US airlines:
- Delta — $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
Comparing operating margins for major US airlines
How do the operating margins for the major US airlines compare (operating income divided by operating revenue)?
- 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 divided by 10.472 billion)
- Hawaiian — 8% (52.676 million divided by 656.751 million)
- United — 5.2% (495 million divided by 9.589 billion)
- JetBlue — 4.1% (76 million divided by 1.871 billion)
- American — 3.5% (375 million divided by 10.584 billion)
- Alaska — 1.3% (25 million divided by 1.876 billion)
Some interesting trends
I’ll let everyone draw their conclusions based on the above statistics.
Since he’s so vocal about how well the airline will do going forward, I think it’s worth reminding everyone of American CEO Doug Parker’s comments from 2017:
- American Airlines will never lose money again
- American Airlines will achieve an average of $5 billion in pre-tax profits annually going forward
- In good years American could achieve $7 billion in pre-tax profits
- In off years American would likely “only” achieve $3 billion pre-tax profits
- He feels that American’s “stock is so undervalued it defies logic”
So American has some catching up to do! Quarter after quarter, logic just seems to be defied!
As pointed out by View from the Wing, it’s interesting to compare PRASM and CASM at airlines. PRASM is the “passenger revenue per available seat mile,” while CASM is the “cost per available seat mile.” American’s first quarter PRASM was 14.49 cents, while CASM was 15.31 cents. In other words, American lost 0.82 cents for every seat mile offered.
This doesn’t account for cargo revenue, but even when you add that in, American still didn’t make money flying.
Rather their (mild) profit comes from the “other revenue” American got, which totaled $708 million. This includes AAdvantage and other partnerships.
As a point of comparison, Spirit’s CASM was 7.81 cents, while their TRASM (total operating revenue per available seat mile) was 8.71 cents.
It’s interesting to see how different US airlines did in the first quarter. As I said at the beginning, this doesn’t paint a full picture, since different airlines faced different challenges the first quarter.
But the overall and consistent trends we’re seeing are valid — Delta continues to outperform other legacies, American continues to lose money actually flying planes, and Alaska hasn’t been the Wall Street poster-child that they were before they took over Virgin America.
Are there any results here that surprise you?