Q2 Earnings in a Picture – As Fuel Costs Rise, It’s Still All About the Revenues

Continuing on with new ways of visualizing earnings information, this week’s charts focus on understanding how detailed earnings line items have changed year-over-year.  Starting from Q2 2017 net income, we can track each individual line item of the income statement and how that impacted the net income for Q2 2018.  The result provides a unique perspective into the strategies of the U.S. legacy carriers. The short story is that fuel costs have greatly increased for all airlines.  Yet, it is how the airlines have been able to manage the increase in fuel costs that proved to be the difference this quarter. Both United and Delta were able to increase ticket revenues beyond the increase in fuel costs, while American struggled.  United fared better than Delta in managing ex-fuel expenses as the folks in Atlanta saw expenses increasing across the board.  Yet Delta’s ability to continually find new revenues left them […]

Quarterly Earnings Visualized

  (All numbers in millions USD) Four times a year we are bombarded with numbers as companies report their earnings.  Through this onslaught of numbers, it is not difficult to find the relevant information on how an airline performed in that quarter.  Taking a visual approach to earnings provides a different perspective. This week we visualize the three U.S. Legacy carriers Q2 earnings in the form of a sankey diagram.  This type of diagram shows the flow of revenues into the organization, and it’s exit out;  through operating expenses, non operating expenses, or income tax.  What’s left is net income. These charts also illustrate the differences in each of the airlines’ reporting.  While all break down revenues by region, United splits out regional revenues, while Delta and American explicitly show loyalty program revenues.

Fuzzy Numbers – The Need for Context When Counting Airshow Orders

While hundreds of aircraft are announced during the week of the summer airshows, the reality is often a different picture.  Aircraft orders don’t happen overnight, even within a week.  They typically take months of preparation, analysis, and negotiations bringing into question exactly how so many deals get done during airshows. The answer is fairly obvious in that airshows become a target for close-in deals to be timed for the wow factor.  A deal can be delayed by weeks to fall into the airshow, or accelerated to catch the buzz of the show.  Of course there are always exceptions where companies can move extraordinarily quickly, but by-in-large airshow orders are planned weeks and months in advance.  Announcing a firm order at an airshow adds value beyond the manufacturer as the airlines also enjoy the positive publicity around a new aircraft order.  However, beyond firm aircraft orders, there is another way manufacturers […]

Visualizing the History of Airshow Orders by Day

The Farnborough airshow begins next week, and the usual flurry of orders is certain to begin.  This week, we look at the Paris and Farnborough airshow order announcements by day over the past 20 years. In general, the order volumes at airshows have increased over the past two decades.  The years following 2001 were understandably quiet years, but the order excitement around the airshows is as robust as it has been.  Expect most orders during the first four days as these are the industry trade show days of the airshow, while the public gains access in the later days. Monday morning starts the excitement at Farnborough.  Expect an exciting week through Thursday as this looks to be another strong year for airshow orders. Already announced, but not part of the Airshow order tally is Airbus’ announcement that Jetblue has purchased 60 A220-300s, (the formerly named C Series CS300).  We will […]

Using Cargo to Forecast Passenger Traffic Growth

Can boxes predict butts?

One of the major challenges in the airline industry is forecasting demand.  New aircraft typically require orders to be placed years ahead of delivery.  Aircraft heavy maintenance schedules are set years out, which largely determines a retirement schedule.  As a result, the ability to forecast capacity requirements years into the future is key to not only the airlines, but also the manufacturers, airports, lessors, and MRO facilities, among countless others. A typical forecast may rely solely on scheduled new aircraft deliveries in a backlog and an averaged retirement schedule based on aircraft age.  While that may be sufficient for some, truly understanding the fundamental capacity and demand requirement can create a key competitive advantage.  A lot of time is being spent at VisualApproach.io determining which factors affect future capacity needs, then building artificial intelligence models to improve the fidelity of our industry forecasting. The typical variables we all grew up […]

Dwindling Variety – Domestic Fleet Choices Aren’t What They Used To Be

A quick nostalgic chart this week as we look back on the difference in fleet composition between 2017 and 2000.  The days of finding variety in fleets is quickly fading.  If you are traveling within the U.S., you have a 2 in 3 chance of being on a 737 or A320 family aircraft.  The writing has been on the wall for several years, however domestic wide-bodies are now largely a thing of the past. In 2000, there were 27 aircraft types that flew 95% of the domestic traffic, while last year that number was only 18.  This trend looks to  continue as the MD-80s and small RJs are retired, and replacement aircraft continue to be more of the same. As nostalgic as it is to look back on the many fleet types we had to choose from a few decades ago, of course there are reasons for the decline in […]

Can We Declare Basic Economy a Success? – A Visual Approach

It has been over a year since Basic Economy made its way onto the industry vocabulary list.  While the impetus was to provide a no-frills fare class to compete with the ULCCs, what excited the airlines (and Wall Street) was the ability to increase fares for those not willing to put up with the Basic Economy level of service.  Delta President, Glen Hauenstein put it succinctly when he explained in a CNBC interview, “Really the success of that product isn’t how many people buy it, in our mind, but how many people don’t buy it and choose another…”  In a nutshell, the idea of Basic Economy is to convince customers to not buy it; rather, to pay for the higher fare. Did Basic Economy live up to the expectations of producing higher fares while maintaining a competitive offering with the ULCCs? American, Delta, and United all rolled-out their various forms […]

Visualizing the U.S. Fleet Over Time

The U.S. Fleet has changed significantly over the past 17 years. Using the free VisualApproach.io data explorer, we can watch the fleet change over the years with the help of animated charts. As the McDonnell Douglas fleet slowly goes away, the landscape has become dominated by four players: Bombardier and Embraer with regional aircraft, and Airbus and Boeing with larger jets. Average stage length has increased overall, with new large regional jets extending the smaller capacity ranges, and wide-bodies being used more exclusively on long range missions. In 2000, the 747-400 averaged the longest stage lengths, at 4,700 miles. By 2017, wide-body stage lengths have been extended to as far as 5,700 miles with the 787-9. Cessna makes an interesting appearance with the largest number of operators being for the oft-forgotten Cessna Caravan. With 17 airlines operating the type and an ultra-low stage length of only 108 miles, the Caravan […]

Finding the Market for the NMA/797 – Why Different Regions Need Different Aircraft

It is impossible to please everyone.  Boeing is certainly being reminded of this as they define the market for the upcoming Middle of the Market aircraft, widely anticipated to become the 797. Looking at the distributions in passenger demand across four key markets for the aircraft, the subtleties of each market become apparent.  North America, which is the largest market responsible for about 40% of the world’s air travel, needs a consistent trans-Atlantic aircraft.  This dynamic of the North American market becomes apparent when looking at the upper-left chart.  Most passengers travel either less than 3,000 miles (domestic) or greater than 4,000 miles (typically trans-Atlantic).  Since the current narrow-bodies can reliably fly to head-wind markets as far as 3,000 miles, it stands to reason the 797 will find its sweet spot with ranges beyond that.  The range of the aircraft is expected to be approximately 5,000 miles, as speculated in […]