It is interesting to me that AMR is crowing about its reported Q2 profits of $95 million (excluding bankruptcy costs and special items).  American Airlines is #3 in revenue (behind Delta and United Airlines) presently.  Delta and United Airlines are projected to report net income in excess of $500 million.

Alaska Airlines, number 7 in revenues (and certainly in possession of a greatly inferior network and high-ish labor costs) has pulled in $105 million in net income.
US Airways, #5 in revenues, should be reporting about $250 million in net income.  Southwest Airlines, #4 in revenues, should also be reporting about $250 million in net income.  It’s notable that SWA also has exceptionally high labor costs (although it also has exceptional productivity from that same labor group).

I really wouldn’t go bragging about $95 million in what is arguably an excellent quarter for all airlines.  This is, if anything, a reminder that the costs aren’t the only thing at play here.  There remains a significant revenue problem that doesn’t really get entirely addressed in the Corners Strategy.

Futhermore, crowing about revenue performance gains isn’t entirely honest either as American Airlines already has the most room to make a difference.  AA has not brought itself to parity with the other legacy airlines on the revenue side of the equation, it simply has experienced revenue growth that all other legacy airlines have also experienced in the past financial quarter.  The real question is how would American Airlines done if it had parity with United, Delta and US airways.  Legacy network carriers who all operate with similar equipment, similar approaches and with the same hub advantages and disadvantages.

Filed under: Airline News by ajax
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