Topic of the Week: First Quarter Earnings Show a Struggling United, JetBlue

For quarter earnings are out for the big guys, and the results are pretty easily divided into winners and losers.

Losers
United lost $489 million (excluding special items) on $8.7 billion in revenue for a -5.6 percent net margin. Unit revenue was down 2.0 percent year over year.

JetBlue earned $4 million (excluding special items) on $1.3 billion in revenue for a 0.3 percent net margin. Unit revenue was up 0.9 percent year over year.

Winners
American earned $402 million (excluding special items) on $10.0 billion in revenue for a 4.0 percent net margin. Unit revenue was up 2.9 percent year over year.

Southwest earned $126 million (excluding special items) on $4.2 billion in revenue for a 3.0 percent net margin. Unit revenue was up 3.1 percent year over year.

Delta earned $281 million (excluding special items) on $7.7 billion in revenue for a 3.7 percent net margin. Unit revenue was up 3.2 percent year over year.

So what do you think? Will the winner keep winning and the losers keep losing or will we see some changes?

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43 Comments on "Topic of the Week: First Quarter Earnings Show a Struggling United, JetBlue"

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Bill from DC
Guest

not sure I see B6 as a loser for finishing in the black. IMO if you finish in the black on ops (before special items) in the airline business, i think you’ve done a good job especially with the current cost of fuel and the competitive environment created by the big 6/5/4/3 bankruptcies and mergers.

David SF eastbay
Member

What really matters for United and Jetblue is do they know why they lost money and do they know how to turn things around.

The ‘winners’ need to figure out what they did right and not screw things up.

Southeasterner
Guest

Pay attention to those Southwest labor costs. Increased by 8%! It looks like labor is going to surpass fuel as their largest cost next quarter.

jskyz81
Member
so what your saying is that southwest should join the race to the bottom companies, cut back employment contract out more work for lower pay, and help assist the further destruction of the American way of life by destroying wages and benefits all in the name of increasing profit margins for investors and senior management and make tons of money like spirit and Allegiant amongst others just so you can get your wonderful $20 faire from A to B? Well that’s just wonderful. its sad how those out there feel that as long as they don’t lose anything who cares… Read more »
Southeasterner
Guest

Ummm ok.

Or you could just ask the question why labor costs increased by 8% on revenue growth of just over 2%.

For all I know management could have given themselves a huge bonus at the end of the year, which would also irritate me as a shareholder.

Chase
Guest

This argument is thrown around as if unskilled jobs in customer service, ramp, inflight, etc were always intended for long-term careers. That simply is not the case, and would not be the case without the union protections. I’m not going to start a war over union existence, but blaming customers and not the ultra-competitive environment these companies operate under is absurd. This is a business operating in a capitalistic economy, not a communist candy shop in existence for the sole benefit of ‘the common man.’

LT_DT
Guest
I don’t think it’s fair to characterize customer service as an unskilled job. It It many cases, they have to learn complex software and, more importantly, how to deal with people. It seems to me that the difference between a CSA who knows his or her job and one who doesn’t is pretty clear to spot, and that wouldn’t be be the case if it was truly unskilled work. I would think that the same rationale would apply to inflight and ramp. There’s a big difference between the average Southwest flight attendant and the average ExpressJet one (just to pick… Read more »
Sean M.
Member

I wonder how much United is missing having US Airways in the Star Alliance. I’m a US Airways FF, and starting January 1, I have taken 10+ segments on American metal, where those would have been on United metal if US Airways was still part of Star Alliance. I’m sure losing US Airways has hurt United and helped American’s numbers.

JH
Guest

That can’t be an excuse here for UA since US was still part of Star Alliance until March 31

Sanjeev M
Guest
If anything, US leaving Star is putting those Star-loyal flyers back onto United. I’d say this is a boost to IAD/IAH feeder flights to the Southeast US (CLT replacement) and the EWR/ORD flights to the northeast (PHL replacement). Yes lot of the US business went to AA. CLT was and still funnels a lot of low-yield connections and Florida, and UA is probably not concerned about losing that. I was hoping UA uses IAD to be more aggressive in the South, but they can’t seem to get much working other than international feeders because the domestic O&D clearly prefers DCA,… Read more »
Sanjeev M
Guest

Q1 is traditionally weak so let’s keep that in mind. Lot of the media coverage has been focused on the weather events hitting UA particularly hard due to the locations of their hubs and more use of regional aircraft vs DL/AA/WN. The numbers just go to show that margins in this industry pale in comparison to most other industries.

jskyz81
Member
YES ABSOLUTELY!!!!! Sooner or later United is just going to have to face the music and learn that there excessive use of 50 seater jets is really hurting them big time!! there going to have to bite the bullet and combine more of the RJ flying on to main line metal with larger planes. however one thing that will be really sad to see is a possibility of off loading some regional contract flying hurting some jobs at regonals. but from what I recall that there is a so call pilot shortage so perhaps the mass reduction of 50 seat… Read more »
Seatback
Guest

AA (ORD/JFK/PHL/CLT) and Delta (MSP/DTW/JFK) were also significantly exposed to the extreme weather and both reported excellent results.

Neil S.
Guest

I’ve seen the harsh winter argument. But DL has hubs at JFK/LGA, DTW, and even ATL was destroyed this winter with ice storms.

I’m no expert, but it sure seems like UA has some other issues going on.

And given how much people whine about Skypesos, and how SkyTeam is worse than *A – it’s interesting to think about.

Ben Shockley
Guest
United is too focused on cutting cost and not growing revenue. Their service continues to suffer and their corporate accounts are unhappy. Delta knows that growing revenue is the path to profitability. AA is a little disorganized and they still have to get through the merger and their service will suffer at some point. Southwest no longer has a fuel cost advantage and is going to struggle to compete. They don’t want to be in thd GDS because they don’t want anyone comparing them. They are not a LCC any longer and they need to figure out who they want… Read more »
wijadr
Member

Notice how the airlines that are improving their on board product (DL & AA) are profitable but the major that has destroyed on board product (UA) is being rewarded appropriately. Wasnt it Gordon Bethune (former CO Pres) who said you can keep take things of a pizza until no one wants to pay for it anymore. I gues UA’s cheap pizza is being valued accordingly.

bmv07039
Member

Not surprised that UA lost money. Their product is terrible…and that’s a complement ( I’m trying to be civil). In reading the reviews, I’m NOT the only one who feels that way. BRING BACK CONTINENTAL…..PLEASE!!!

frankgaron
Member

United was, is, and always will be a garbage airline. Now they’ve taken the late, great Continental along with them on their ride to the bottom. Darn shame, IMHO…

RAW
Guest

Well, it’s run by Continental brass. The fish stinks from the top.

John G
Guest

UA is having real trouble combining the cultures of CO and the old UA. Whether they admit it or not, the old UA people in general have poor attitudes, poor service, and poor quality. CO was a better product, and had better employees. Unfortunately, this is still two airlines in many ways, and the UA people are getting even unhappier.

AA, DL, and WN also got creamed with winter weather, and still made money. B6 can be excused because they are more exposed with their Northeast-heavy schedule. UA can’t.

MeanMeosh
Guest
“UA is having real trouble combining the cultures of CO and the old UA. Whether they admit it or not, the old UA people in general have poor attitudes, poor service, and poor quality. CO was a better product, and had better employees. Unfortunately, this is still two airlines in many ways, and the UA people are getting even unhappier.” The irony is, you’ll hear pretty much the mirror image of that complaint from pm-UA partisans about how CO has destroyed “their” airline. And that, I think, is the major malfunction here, a very much “us vs. them” mentality on… Read more »
Ken Schmidt
Guest

You would think after the disaster that was Penn Central back in the 70’s with it’s Red v. Green teams eating away at it’s core, Management schools today would teach how to avoid such disasters. Instead, they focus on meaningless terms and ideas that serve only to cover up such problems.

Merger integration is more than making sure schedules and computers mesh properly together.

Art
Member

The Penn Central comparison is just about spot on! The only difference is that they combined three companies, New York Central, Pennsylvania, and the New Haven railroads. It is also interesting that UA is doing a sort of reverse Pan Am move, slowly destroying the domestic system and trying to be more and more just international.

John G
Guest

Interesting that AA and UA have similar costs…$9.6 billion for AA and $9.3 billion for UA, but AA’s revenue is $1.3 billion higher.

Robert S.
Guest

I would not consider B6 a loser for this QTR. They finished in the black, and the percentage of their operation impacted by the rough winter weather is likely higher that any of the others on which you reported. United is another story.

A
Guest

It’s good to see AA is turning thing around and hasn’t DL been on a tear lately? Or at least as much of a tear you can have in the airline business. Surprised B6 is getting considered a “big guy.” As for all the UA hate, I wouldn’t know what their issues are. I haven’t flown them since CO went goodbye.

noahkimmel
Member

DOT Defines “Major Airline” as over $1 Billion in revenue, which JB has had for a few years now.

Approx number of daily flights (marketed) yesterday:
DL 5448
UA 5343
AA 3605 / US 3212
WN 3448 / FL 318
AS 876
B6 848
NK 270
HA 224
F9 237
VX 177

There is a clear drop off between UA/DL/AA/WN and AS/B6 and NK/HA/F9/VX

jaybru
Member
I don’t put too much stock in a particular quarterly report. People above my pay grade get paid handsomely to help, or should I say confuse me. Always interesting to see one airline investing in another airline, like DL with Virgin Atlantic and to see how one’s refinery is doing. I believe I see DL’s 1Q loss for the Philly refinery was $41mil. But, there’s always something “unpredented,” something else “negatively impacted by,” but something showing the company’s great “strength and resilience,” plus the “great opportunity ahead.” Whatever. I did glean some interesting revenue stats, which I compared with those… Read more »
Eric A.
Member
Ok, I know we fondly remember the CO of 1999 but, to be fair, the service levels of CO in 2009 were nothing like Gordy’s airline a decade earlier. Management had decided that many of the freebies and creature comforts added little to the bottom line and those cost items were disappearing before the merger took place. New UA’s focus on costs is, ironically, wrecking its unit revenue by making it’s product (hard and soft) uncompetitive . Over-reliance on single class RJ’s in markets where AA/US and DL offer 2 class larger RJ’s (or mainline) is killing them. Yes, UA… Read more »
jskyz81
Member
absolutely! I honestly believe with UA that they face an really sad state of affairs when it comes to there existing operations. to my understanding UA has more E-145/140s, CRJ-100,200s in operation than any airline out there and flying them on competitive routes just to give the passenger an option to get there. I also believe that there also focused more on the cost cutting and the amount of frequency within a route in order to stay competitive instead of the value of an premium package on certain routes and destinations unlike delta has more options on more of its… Read more »
marvzwerin
Member
Having flown too many segments on UA in the past 12 months, the ONLY times I’ve found the crew pleasant and attentive has been on those planes staffed by the old CO flight attendants. On one occasion, after telling one FA that I thought the service was the best I’d experienced on a UA flight in the last 5 years, her response was, literally, “what do you expect. We’re the old Continental crew.” If flying out of SFO offered me many other choices to the cities I regularly visit, I’d take it. In fact, I’ve virtually switched to Virgin for… Read more »
Seatback
Guest

Oddly enough, VX has the second rudest flight attendants, after NK, according to reports published this week.

Courtney
Guest

I’d agree with this – I am also a SFO “hub captive” United flier – it simply has by far the best network out of SFO for business travel – but the VX hard product is light years ahead. However, every time I fly them there’s at least one or two FA’s who are incredibly snotty and rude! However, they may be similar to UA’s except for the fact that on UA I don’t notice anymore…

Jason
Guest

I noticed the URL for this Topic of the Week is “…-jetblue-pilots-choose-to-unionize/” … last minute “equipment change”?

trackback

[…] about benefits for everyone, air carriers and consumers alike. Given the recent reports from many North American carriers reviewing their first quarter 2014 financial performance and that merger activity has seemingly hit its peak, I thought it would be a good time to review […]

James A
Guest

You forgot to mention Hawaiian.
They also had another quarterly loss. That ambitious international push has come with red ink.

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[…] each held Diamond on Delta since 2009. None of them will ever fly UAL again because of UAL labor. http://crankyflier.com/2014/04/25/to…e-to-unionize/ If United does not get their sheet together they will revisit bankruptcy—this is very […]

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