In what turned out to be one of the worst-kept secrets of an aircraft order in recent history, Porter finally announced the acquisition of 30 E195 E2s. Rumours (with a “u”) had been circling since February of a sale-and-leaseback deal being offered by the non-operational airline. The recent order announcement suggests a buyer has been found.
The recovery of passenger traffic post-pandemic has surpassed all other major aviation markets. Even so, this recovery has taken place largely absent of international travel. What, then, to do with the fleet of wide-body aircraft without distant markets to which to fly?
Welcome back to the skies, Canada
Canada just hit a new post-pandemic record, screening over 50,000 travelers during the holiday weekend. This brings the country to a weekly average of 22% of same day-of-week July 2019 numbers. The recent spike, even if still down levels not before experienced before the pandemic, is indicative of the high levels of pent-up demand expected across the world.
United is one of the only global carriers to have ordered Pratt & Whitney-powered 777s. This Feb, United had an uncontained engine failure leaving Denver that led to the grounding of the Pratt-powered fleet. The Continental pre-merger fleet was GE-powered, so this only impacted part of the fleet, but it impacted an important part. United’s sub fleet of domestic configured 777s has 28 flat beds upfront and 336 seats in coach. Those aircraft are all powered by PW engines while all GE-powered aircraft are in the international configuration with 50 flat beds, 24 premium economy seats, and 202 seats in coach.
The recent TAC Analysis follows not only the recovery of U.S. passengers but also the day-of-week variance. Since this chart compares the same day of week 2019, the peaks and valleys you are seeing are actually higher than experienced in 2019.
Much has been discussed in the industry about United’s large order, the massive increase in seat gauge it will bring, and how the new fleet will fit into the recovering market. Yet, it is the ability to take delivery of the massive commitments that is now United’s new problem.
Revisiting our original 2021 forecast from October, the U.S. air traffic rebound has exceeded even our expectations. Our decision tree modeling was used to determine the proceeding 14 months at a time when the pandemic was barely six months old. Still underestimating the actual recovery, the consensus drawn from this forecast has proven to be the closest approximation published.
The numbers largely speak for themselves. What you see is a good story. What you don’t see is that it’s not as good a story as American’s rivals. This brings to light several strong areas, but also some of concern. It is good to see domestic revenues continue to increase, however it is concerning to see the declining trend of Pacific and cargo revenues. This is consistent with the competition, and certainly not limited to American. The story remains: American’s revenues are increasing, however not at a pace to match Delta and United. Meanwhile, costs continue to increase at all airlines. As much as we experiment with different techniques to visualize earnings, sometimes the simple way is the best. The income statement is important, and the best way to show the absolute magnitude is to show the numbers. However, we also believe context is important. Included for each line item […]
Who controls the Chicago O’Hare domestic market? The answer is complicated. Until as recently as Q4 2018, the answer has surprisingly been American… not United. And it hasn’t even been close. In fact, American enjoyed a 7 point advantage over United as early as Q1 2016, in United’s own back yard. Things have changed. When asked how United has changed in the past two years with the new management, I often point to the ORD example. Most don’t realize two things: United was not the airline serving the most of the local Chicago market They are now Looking at capacity share, United has long held the crown at O’Hare. However, it isn’t until recently that United has begun adding smaller markets with regional jets from ORD to boost that point-of-sale presence. The end result is a new old battleground in Chicago. American will continue to compete fiercely, and we may […]