Seeking Alpha
Profile| Send Message| ()  

In what is typically a money losing quarter for the airline industry, AirlineFinancials.com LLC is projecting all major airlines excluding United will report profits this week for the recent 1st quarter. Based on our projections this will be the 3rd consecutive year the industry has set a record for 1st-quarter revenue. United (UAL) is the only major airline projected to lose money in the 1st quarter.

For full year 2013, the industry looks very positive. AirlineFinancials.com LLC projects the major airlines will collectively report a record $6.3 billion in profits from a record $145 billion in revenues. This will be at least the third consecutive year of record revenues for every major airline and the fourth consecutive year of profits for the industry. Based on our projections, for only the second time since the 1990s, every airline will have a profit this year.

To keep the airline industry in perspective: Profit margins are still projected in the low single digits and significantly less than they were in the 1990s (margin is the profit ratio of revenue). Including the record $6 billion projected profit for 2013, the industry has accumulated over $17 billion in net losses since 911.

Worth noting (mainline operations) -

· Average jet fuel price for 2012 was a record high at $3.06 per gallon (spot price excludes taxes, servicing, delivery, hedging costs, etc.). Airlines paid over 370% more for jet fuel per gallon last year than they did less than 10 years ago. In the last decade, the cost of fuel has increased from ~11% of airline operating costs to ~35%.

  • Airline capacity is little changed from what it was 10 years ago.
  • 10 years ago the average passenger paid 11.5 cents to fly one mile. Today it is approximately 14.5 cents. The increase has been similar to the change in CPI.
  • 10 years ago the cost of fuel for the average passenger ticket was $24. Today it is approximately $80. An increase of over 330%
  • 10 years ago the average labor cost per passenger was ~$44. Today it is approximately $42.
  • The average one-way passenger distance is approximately 1,385 miles (18% more than it was 10 years ago).
  • The merger of American and US Airways later this year will be a positive for the industry, the markets they serve, labor, and the consumer.

Individual airline projections for 1st quarter 2013- *

Projections exclude special items and one-time charges

  • United - $303 million loss from $8.7 billion revenue
  • Delta Air Lines (DAL) - $28 million profit from $8.5 billion revenue
  • American (AAMRQ.PK) - $8 million profit from $6.1 billion revenue**
  • Southwest Airlines (LUV) - $36 million profit from $4.1 billion revenue
  • US Airways (LCC) - $44 million profit from $4.0 billion revenue
  • JetBlue Airways (JBLU) - $30 million profit from $1.3 billion revenue
  • Alaska Air Group (ALK) - $44 million profit from $1.1 billion revenue

* Every airline is projected to have record 1st-quarter revenue

** Reported last week

Individual airline projections for full year 2013- *

Projections exclude special items and one-time charges

  • United - $1.4 billion profit from $38.6 billion revenue
  • Delta - $1.8 billion profit from $37.6 billion revenue**
  • American - $1.1 billion profit from $26 billion revenue
  • Southwest - $776 million profit from $18 billion revenue**
  • US Airways - $626 million profit from $14.5 billion revenue**
  • JetBlue - $220 million profit from $5.5 billion revenue**
  • Alaska - $433 million profit from $5 billion revenue**

* Every airline is projected to have record 2013 revenue

** Record profit

Source: Airlines Set Course To $6 Billion In Record Profits For 2013