- Six months ended 30-Jun-2010:
- Passenger traffic:
- Air Canada: +25.4%;
- American Airlines: +8.5%;
- Delta: +13.6%;
- Load factor:
- Air Canada: 88.7%, +3.1 ppts;
- American Airlines: 84.2%, +5.9 ppts;
- Delta: 84.7%, +5.0 ppts.
- Passenger traffic:
Air Canada, American Airlines, Delta reports double-digit rise in Asia Pacific traffic in Jun-2010
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North American airlines reduce CASK in 2015 thanks to lower fuel, but ominous labour cost trends
North America’s large major global network airlines enjoyed significant unit cost reductions for the full year 2015, according to CAPA's CASK Database, as average fuel cost per barrel remained at record lows for most of the calendar year. The decline in fuel costs in some instances helped to offset a challenging apparent trend in increasing salaries, wages and benefits, and profit-sharing expense.
Favourable fuel cost trends for those airlines should continue into 2016 as fuel costs per barrel for both WTI and Brent Crude are projected to fall year-on-year compared with 2015. For what forecasts are worth, fuel prices are projected to begin climbing in 2017; however, prices will remain far below 2014, when prices averaged over USD90 per barrel.
Falling full costs have helped lower the unit cost trend line year-on-year for global full service airlines, but, along with fuel cost inflation starting in 2017, some North American global network airlines will also face rising labour costs. Delta is in the process of pilot negotiations, United’s has agreed up to 31% increases for its flight attendants and is still in negotiations with its mechanics. Depending on the outcomes of the pilot negotiations and mechanics votes, Delta and United will face inflationary labour cost pressure during the next two years.
United, Delta, American Airlines: Cost creep, rising oil prices put pressure on the Big 3 to deliver
For the large three global US network airlines – American, Delta and United – the final quarter of 2016 offers some hope of negative unit revenue trends starting to stabilise, a welcome sign after two years of declines. But those positive developments are occurring against a backdrop of rising fuel costs and overall cost creep for those airlines, as labour expenses rise in the face of new collective bargaining agreements they have achieved.
Although each airline has offered a nuanced interpretation of domestic trends, the general consensus is that dynamics began to improve in Aug-2016 as close-in yields started to strengthen. After enduring tough conditions in Latin America driven by Brazil’s recession, American and Delta posted positive passenger unit revenues (PRASM) in their Latin entities in 3Q2016, and expect further improvement. Higher industry capacity is creating challenges for those airlines in the Atlantic and Pacific, but generally it seems that the path of unit revenue declines in those regions should moderate progressively.
Delta is aiming to post positive PRASM early in 2017, and American believes it can reach a positive result in total unit revenues in 1H2017. For now United is not offering a specific time period for a reversal of negative PRASM, but feels confident it is heading in the right direction, given the changing dynamics in certain areas of its network.