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Airlines for America (A4A) Thanksgiving Air Travel Forecast and Year-To-Date Financial Results of the U.S. Airlines
 

Airlines for America (A4A) Thanksgiving Air Travel Forecast and Year-To-Date Financial Results of the U.S. Airlines

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  • http://www.usatoday.com/money/industries/travel/story/2012-08-20/Regional-airlines-face-closings-bankruptcy/57169432/1

Airlines for America (A4A) Thanksgiving Air Travel Forecast and Year-To-Date Financial Results of the U.S. Airlines Airlines for America (A4A) Thanksgiving Air Travel Forecast and Year-To-Date Financial Results of the U.S. Airlines Presentation Transcript

  • Financial Review & Thanksgiving Travel ForecastJohn P. HeimlichVice President & Chief EconomistNov. 7, 2012
  • Price of Jet Fuel Running Higher in 2012 Than in Record 2011 Price per Gallon (Gulf Coast Jet Fuel) Price per Barrel (Five-Day Moving Average) $145 $3.08 $3.00 $135 $2.17 $125 $115 $1.02 $105 $0.58 $0.54 $95 $85 $75 2011 YTD 2012 1991-1995 1996-2000 2001-2005 2006-2010 1-Jul 28-Nov 2-Apr 2-May 2-Feb 3-Jan 29-Oct 1-Jun 31-Jul 30-Aug 29-Sep 3-Mar 28-Dec WTI Brent Jet Source: A4A and EIA (for WTI and Brent crude oil and U.S. Gulf Coast jet fuel) 2 airlines.org
  • So Far in 2012, U.S. Passenger Airline Industry* Results Inferior to 2011Despite 5.6% More Revenues, 6.2% Higher Costs Reduced Profit Margin to 0.2% YTD 3Q12 vs. YTD 3Q11 % Better/(Worse) Net Profit Margin (%) Operating Revenues 5.6 Operating Expenses (5.3) 0.9 Fuel (34%) (6.0) Wages and Benefits (23%) (5.3) Landing Fees & Rents (5%) (2.5) Maintenance/Materials (6%) (9.4) Depreciation & Amortization (4%) (3.0) 0.2 Other (28%) (4.5) Other Income/(Expenses) (32.3) Subtotal Expenses (6.2) YTD 3Q11 YTD 3Q12* A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 3 airlines.org
  • After Three Quarters, U.S. Airline* Earnings Equal 0.2 Pennies per Dollar of RevenueWeak Profit Margin in Stark Contrast to Other Fortune 500s U.S. Airlines* YTD 3Q12 U.S. Airlines* ex. AMR YTD 3Q12 Net Income ($ Millions) 262 Net Income ($ Millions) 2,421 Net Margin (Percent) 0.2 Net Margin (Percent) 2.7 Ford Motor Co. YTD 3Q12 Apple Inc. YTD 3Q12 Net Income ($ Millions) 4,067 Net Income ($ Millions) 28,689 Net Margin (Percent) 4.2 Net Margin (Percent) 26.0* A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 4 airlines.org
  • Thus Far in 2012, U.S. Airlines Have Earned 50 Cents per Enplaned PassengerAlbeit Slim Margins Helping Carriers Recover from Massive 2001-2010 Deficit Net Income (Billions) Net Income per Enplanement $20 $2 $0.77 $0.50 $0.6 $0.3 $0 $0 ($20) ($2) ($40) ($4) ($60) ($6) ($62.9) ($80) ($8) ($100) ($10) ($9.22) 2001-2010 2011 YTD 3Q12 2001-2010 2011 YTD 3Q12 Sources: For 2001-2011, A4A analysis of DOT Form 41 data reported by U.S. airlines for which passenger revenue constitutes at least 25 percent of operating revenues; for 2012, A4A analysis of earnings reports of Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways 5 airlines.org
  • A4A Projects U.S. Airlines to Carry Nearly 24M Thanksgiving* Passengers in 2012Up Slightly from 2011 But Still 10 Percent Below 2006-2007 Peak Onboard Passengers (Millions) Estimated to Fly on U.S. Airlines over 12-Day Holiday*30 26.2 26.225 23.9 23.2 23.6 23.6 23.7 22.5201510 5 0 2005 2006 2007 2008 2009 2010 2011 2012FSource: A4A, selected sample carriers and DOT T100 segment data * In 2012: Friday, Nov. 16 through Tuesday, Nov. 27 6 airlines.org
  • A4A Projects Daily Thanksgiving Passenger Volumes to Range from 1.3M to 2.4MSunday Return, Wednesday Before, Monday Return Expected to Be Top Three Projected Passengers (Millions) 2.4 2.2 2.3 2.3 2.2 2.0 1.9 2.0 1.8 1.9 1.6 1.3 #4 #10 #7 #8 #5 #2 #12 #11 #6 #1 #3 #9 Sun., 11/18 Sun., 11/25 Fri., 11/16 Fri., 11/23 Wed., 11/21 Tue., 11/20 Tue., 11/27 Thu., 11/22 Sat., 11/17 Mon., 11/19 Sat., 11/24 Mon., 11/26 Source: A4A, selected sample carriers and DOT T100 segment data * In 2012: Friday, Nov. 16 through Tuesday, Nov. 27 7 airlines.org
  • Financial Pressures Mean Further Cuts in Scheduled Domestic Air Service in 2013As 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) (17.2) Sched. Domestic Flights (2.4) (13.1) Sched. Domestic Seats (1.3) 1Q13 vs. 1Q07 (9.9) 1Q13 vs. 1Q12 Sched. Domestic ASMs (0.1)Source: Innovata (via Diio Mi) published schedules as of Nov. 2, 2012; an available seat mile (ASM) is one seat flown one mile 8 airlines.org
  • U.S. Airlines Also Cutting Capacity in Many Markets Outside North America Change (%) in Scheduled ASMs* from USA to non-North America: 1Q 2013 vs. 1Q 2012 8.8 3.8 (1.0) (8.3) (9.1) Carib. & LatAm Europe ME & Africa North Pacific South Pacific* Scheduled U.S. airline flights departing U.S. airports for other continents; an ASM is one seat flown one mile Source: Innovata (via Diio Mi) published schedules as of Nov. 2, 2012 9 airlines.org
  • Improved Airline Finances Have Translated to 21 Consecutive Months of Job GrowthAfter Years of Losses, U.S. Airlines Have Also Been Able to Reinvest in EquipmentAirline Jobs Added in 21 Months in a Row Aircraft Capital Spending on the RiseYOY Change (%) in Full-Time Equivalent Employees Average Annual Estimated Aircraft/Engine CapEx (Billions) 4 $16.9 2 0 $9.7(2) $9.2(4) $6.6 $5.8 $5.8 $5.7 $4.8 $4.2(6) $3.4(8) 2011 2007 2008 2009 2010 2012 2013 06-09 00-01 11 12F 13F 02 03 04 05 10 Source: BTS for U.S. scheduled passenger airlines Source: Bank of America Merrill Lynch airline equity research (Jan. 5, 2012) 10 airlines.org
  • www.airlines.org