2012 Year End Financial and Operational Results Forecast Prep February 21, 2013 Media Briefing
Upcoming SlideShare
Loading in...5
×
 

2012 Year End Financial and Operational Results Forecast Prep February 21, 2013 Media Briefing

on

  • 1,968 views

U.S. airlines delivered one of their best years ever for operational performance, built on their stellar safety record, and achieved a narrow profit despite weathering some of the highest jet fuel ...

U.S. airlines delivered one of their best years ever for operational performance, built on their stellar safety record, and achieved a narrow profit despite weathering some of the highest jet fuel prices and steepest tax burdens in history. Much more needs to be done to ensure the U.S. airlines remain profitable, continue to create American jobs, restore and grow air service and remain global competitors. This is where a National Airline Policy comes in. We look forward to working with Congress and the administration on this important initiative.

Statistics

Views

Total Views
1,968
Views on SlideShare
1,657
Embed Views
311

Actions

Likes
0
Downloads
21
Comments
0

3 Embeds 311

http://www.airlines.org 271
http://airlines.org 38
http://translate.googleusercontent.com 2

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Full Year 2012Net ProfitEnplanements - ConsolidatedNet Profit/EnplanementALGT 79 6,987,324$11.25ALK 316 25,896,000$12.20AMR (1,876) 107,806,578($17.40)DAL 1,009 164,571,529$6.13HA 53 9,484,204$5.61JBLU 128 28,956,000$4.42LCC 637 82,546,000$7.72LUV 421 133,978,100$3.14UAL (723) 140,441,000($5.15)Total 44 700,666,735$0.06Total (less AMR) 1,920 592,860,157$3.24
  • U.S. Airlines* ex. AMR2012Net Income ($ Millions)1,920Net Margin (Percent)1.64
  • “Standard & Poor’s ratings express the agency’s opinion about the ability and willingness of an issuer…to meet its financial obligations in full and on time.”
  • http://www.usatoday.com/money/industries/travel/story/2012-08-20/Regional-airlines-face-closings-bankruptcy/57169432/1
  • http://www.usatoday.com/money/industries/travel/story/2012-08-20/Regional-airlines-face-closings-bankruptcy/57169432/1
  • Southwest 24.9%Delta 19.5%United 15.6%American 11.4%US Airways 10.2%JetBlue 5.2%Alaska 4.0%Frontier 2.2%Spirit 1.8%Hawaiian 1.5%Allegiant 1.5%Virgin America 1.3%Other 1.0%
  • Southwest 24.9%Delta 19.5%United 15.6%American 11.4%US Airways 10.2%JetBlue 5.2%Alaska 4.0%Frontier 2.2%Spirit 1.8%Hawaiian 1.5%Allegiant 1.5%Virgin America 1.3%Other 1.0%
  • Southwest 24.9%Delta 19.5%United 15.6%American 11.4%US Airways 10.2%JetBlue 5.2%Alaska 4.0%Frontier 2.2%Spirit 1.8%Hawaiian 1.5%Allegiant 1.5%Virgin America 1.3%Other 1.0%
  • U.S. Airlines* ex. AMR2012Net Income ($ Millions)1,920Net Margin (Percent)1.64

2012 Year End Financial and Operational Results Forecast Prep February 21, 2013 Media Briefing 2012 Year End Financial and Operational Results Forecast Prep February 21, 2013 Media Briefing Presentation Transcript

  • U.S. Airline Industry Financial Resultsand Operations: An Early 2013 ReviewJohn Heimlich Dan ElwellVP & Chief Economist SVP-Safety, Security & OperationsFebruary 21, 2013
  • U.S. Airlines Incurred More Than $50 Billion in Fuel Costs in 2012Average Spot Price of Jet Fuel Has Risen 260 Percent Since 2000, 42 Percent Since 2010 Due to Rising Prices . . . . . . Incurring Higher Costs Dollars per Gallon (U.S. Gulf Coast) Billion U.S. Dollars per Year $3.06 $50.4 $2.15 $38.8 $33.2 $1.72 $0.85 $16.8 2000 2005 2010 2012 2000 2005 2010 2012 Source: Energy Information Administration Source: BTS for U.S. airlines 2 airlines.org
  • Price of Jet Fuel Reached All-Time High in 2012, on the Rise Again in 2013 Price per Gallon (U.S. Gulf Coast) Price per Barrel (Five-Day Moving Average) $3.26 $140 $3.13 $3.06 $3.00 $130 $2.17 $120 $110 $1.02 $0.58 $100 $0.54 $90 $80 20-Sep-12 11-Aug-12 27-Feb-13 7-Feb-13 10-Oct-12 30-Oct-12 18-Jan-13 19-Nov-12 9-Dec-12 2-Jul-12 22-Jul-12 31-Aug-12 29-Dec-12 19-Mar-13 Last Week 2011 2012 1991-1995 1996-2000 2001-2005 2006-2010 YTD 2013 WTI Brent Jet Source: A4A and EIA (for WTI and Brent crude oil and U.S. Gulf Coast jet fuel) 3 airlines.org
  • Relative to Most Goods/Services (and Airlines’ Costs), Air Travel Remains a BargainU.S. Inflation and Airline Costs Have Sharply Outpaced the Price of Domestic Air Travel Product (Unit) 2000 2012 Change (%) College Tuition: Public (Year) $3,508 $8,655 146.7 Gasoline (Gallon, Unleaded) $1.51 $3.64 141.3 Costs Faced by U.S. Airlines (A4A Index) 100.0 204.9 104.9Increase Eggs (Dozen, Grade A, Large) $0.91 $1.84 102.0 Real MLB Baseball Game (Nonpremium Ticket) $16.22 $26.98 66.3 NFL Football Game (Nonpremium Ticket) $49.35 $78.38 58.8 Prescription Drugs (BLS Index) 285.4 440.2 54.2 Postage Stamp (First-Class) $0.33 $0.45 36.4 Whole Milk (BLS Index) 156.9 211.3 34.7 U.S. CPI (All Urban Consumers)1 172.2 229.6 33.3 Air Travel (R/T Domestic Fare + Ancillary)2 $316.96 $380.05 19.9Decrease Air Travel (R/T Domestic Fare Only)2 $314.46 $356.98 13.5 Real Apparel: Clothing/Shoes/Jewelry (BLS Index) 129.6 126.3 (2.6) Television (BLS Index) 49.9 5.4 (89.1) 1. Bureau of Labor Statistics “measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.” 2. A4A analysis of data collected by BTS for YTD 3Q 2012 – excludes taxes; “ancillary” includes revenue from reservation changes and baggage 4 airlines.org
  • From 2000 to YTD 3Q12, Real (Inflation-Adjusted) Domestic Fares Fell 15 PercentWith Ancillary Revenue Included, Domestic Journey Price Fell 10 Percent Average Round-Trip Domestic Airfare in Constant CY2000 Dollars $425 Fares Fares + Ancillary $400 $375 $350 $325 $300 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3Q12Sources: DOT O&D Survey (Data Bank 1B) and Bureau of Labor Statistics for the Consumer Price Index (CPI) 5 airlines.org
  • In 2012, Results of 10 U.S. Passenger Airlines* Results Inferior to 2011Despite 4.5% More Revenues, 4.7% Higher Costs Reduced Profit Margin to 0.1% 2012 vs. 2011 % Better/(Worse) Net Profit Margin Operating Revenues 4.5 Earnings as % of Revenues Operating Expenses (4.5) 2.2 Fuel (36%) (5.9) Wages and Benefits (24%) (4.7) Landing Fees & Rents (5%) (1.3) Maintenance/Materials (6%) (9.0) Depreciation & Amortization (4%) (2.9) Other (26%) (2.3) 0.3 Other Income/(Expenses) (11.8) 0.1 Subtotal Expenses (4.7) 2010 2011 2012* A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 6 airlines.org
  • U.S. Airline Profitability: It’s a Matter of Pennies$152 Million in Profit Spread Over 711 Million Passengers Translates to . . . 2010: 318¢ per Passenger 2011: 77¢ per Passenger 2012P: 21¢ per Passenger* Airfare 94%* A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 7 airlines.org
  • In 2012, U.S. Airline* Earnings Amounted to 1/10th of a Penny per Dollar of RevenueWeak Profit Margin in Stark Contrast to Other Fortune 500s U.S. Airlines* 2012 Ford Motor Co. 2012 Net Income ($ Millions) 152 Net Income ($ Millions) 5,665 Net Margin (Percent) 0.1 Net Margin (Percent) 4.22 Starbucks 2012 Apple 2012 Net Income ($ Millions) 1,434 Net Income ($ Millions) 41,747 Net Margin (Percent) 10.5 Net Margin (Percent) 25.35* A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 8 airlines.org
  • Improved Airline Finances Translated to 21 Consecutive Months of Job GrowthAfter Years of Losses, U.S. Airlines Have Also Been Able to Reinvest in Equipment Airline Jobs Grow When Times Are Good Airline Capital Reinvestment Underway YOY Change (%) in Full-Time Equivalent Employees Aircraft and Non-Aircraft Capital Expenditures (Billions) 4 $15.3 2 0(2) $6.1 $6.2(4) $5.2(6)(8) 2011 2007 2008 2009 2010 2012 2013 2000 2005 2010 2011 Source: A4A and company reports for AirTran, Alaska, Allegiant, America West, American, Continental, Delta, Hawaiian, JetBlue, Northwest, Southwest, Source: BTS for U.S. scheduled passenger airlines Spirit, United and US Airways 9 airlines.org
  • The Airline Industry’s Financial Condition Is Improving, But Far From StellarPer S&P, Only One U.S. Passenger Airline Has Investment-Grade Credit Investment Grade1 (>= BBB-) Speculative2 Grade (< BBB-) ExxonMobil, Microsoft AAA Ford Motor Co. BB+ GE AA+ British Airways, TAM BB Wal-Mart AA Alaska, Allegiant BB- Toyota AA- Avis, Hertz B+ UPS A+ Delta, Gol, United B BP, eBay A Air Canada, JetBlue, US Airways B- Amtrak, Starbucks A- SAS CCC+ FedEx, Marriott, Starwood BBB American D Lufthansa, Qantas, Southwest BBB- Passenger Airline1 Describes issuers with relatively high levels of creditworthiness and credit quality2 Describes issuers with ability to repay but facing significant uncertainties, such as adverse business or financial circumstances that could affect credit risk Source: Standard and Poor’s as of Nov. 19, 2012; “Guide to Credit Rating Essentials: What are credit ratings and how do they work?” 10 airlines.org
  • Financial Pressures Have Generally Translated to Cuts in Domestic Air ServiceAs Rising Costs Outpace Revenues, the USA Continues to See a Smaller Airline Industry “We’ve lost a lot of markets that were served only with the 50-seat (aircraft). We’d like more flights. But you’re not going to have any flights if the airlines don’t make money, so we understand their predicament.” (Larry Cox, president and CEO of the Memphis-Shelby County Airport Authority) ─ “Regional airlines face closings, bankruptcy,” USA Today (Aug. 20, 2012) (13.2) Domestic Flights (0.3) (9.3) Domestic Seats 0.6 % Change: 2Q13 vs. 2Q07 (5.7) % Change: 2Q13 vs. 2Q12 Domestic ASMs 1.4Source: Innovata (via Diio Mi) published schedules as of Feb. 16, 2013; an available seat mile (ASM) is one seat flown one mile 11 airlines.org
  • Some of the Domestic Capacity Cuts Resulted from Brands Ceasing to OperateSoaring Costs and Volatile Economic Conditions Took Their Toll on Many During the 2000s 12 airlines.org
  • Liquidations, M&A, Globalization and Financial Pressures Have Reshaped the IndustryDomestic O&D Share* = 57% Global Network Carriers, 37% Low Cost Carriers, 6% Other US Airways, 10.2% Southwest, 24.9% American, 11.4% Other, 1.0% Frontier, 2.2% Spirit, 1.8% Hawaiian, 1.5% United, 15.6% Allegiant, 1.5% Virgin America, 1.3% JetBlue, 5.2% Delta, 19.5% Alaska, 4.0%* A4A analysis of BTS Data Bank 1B for marketing airlines (incl. regional partners flying under code-share agreements) for the year ended 3Q 2012 13 airlines.org
  • Industry Restructuring Has Helped Pave the Way for Four Major National Networks Delta (including Northwest) United (including Continental) Southwest (including AirTran) American (including US Airways): Proposed 14 airlines.org
  • Competing National Networks Mean Enhanced Service Offerings for Travelers 15 airlines.org
  • U.S. Airline Operations Have Improved Substantially Over Past Five YearsImprovements Enabled by Profitability (Reinvestment), Fewer Flights, Better Weather 2007 2012 Load Factor 79.9 83.0 (est.) (% of seating capacity utilized) On-Time Arrival Rate 73.4 81.9 (% of domestic flights within 00:15) Involuntary Denied Boardings 1.12 0.99 (per 10,000 passengers) Mishandled Bags 7.05 3.09 (per 1,000 domestic passengers) Flight Cancellations 2.16 1.29 (% of scheduled domestic departures)Sources: BTS and DOT Air Travel Consumer Report (http://airconsumer.dot.gov/reports/index.htm) 16 airlines.org
  • Coping with Storms: Increasingly Proactive, Collaborative and Tech-Savvy Then Now Less precise, High-capacity weather Weather forecasts manual process modeling, more real-time tools Many, high-tech - social media, Communication tools Fewer, low-tech 24-hour news, PDA alerts; steady stream to customers Earlier decision-making, Operations philosophy “Wait and see” quicker recovery Intense - across airlines, Collaboration Limited airports, FAA, DHS/CBP/TSA 17 airlines.org
  • www.airlines.org