The large three global US airlines – American, Delta and United – posted nearly USD3 billion in 2Q2016 profits, excluding special items. But revenue continues to be a challenge, with uncertainty stemming from the UK Brexit vote and general economic sluggishness. Domestically, Delta and United continue to face falling corporate yields, even as volumes remain steady.
All three airlines have further revised their 2016 capacity guidance, which seems to have lifted their stock valuations. However, prices are still off yearly highs, and do not show signs of budging until investors see definitive signs of unit revenue increases. Whether or not the laser focus by investors on unit revenue is justified, the reality is that airline valuations will continue to suffer while the industry’s performance in that metric remains negative.
The rise of ULCCs and other factors have driven permanent changes in pricing dynamics in the US industry, and the Big 3 find themselves in a state of adjusting to the new reality. The result is that fundamental improvement in unit revenues is not likely to begin until 2017 – despite investor preference for a quicker rebound.
To access CAPA Premium Analysis you need a CAPA Membership
Your window into the latest insights
CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.
Big picture strategic view
Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.
The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.
Customise your Alerts
CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.
I'm very impressed by the factual and detailed analysis CAPA is always doing.- CEO, Airline Member
Phone: +61 2 9241 3200 | Email: firstname.lastname@example.org