Airlines

Oct 28 2018

American Airlines is losing money on the part of their business which involves flying people. It turns out that American’s passenger operation would look even worse if it hadn’t been for an accounting rules change (ASC 606) that the airline had to adopt effective January 1, 2018.

The accounting rules change of course may be the best possible way to reflect the costs associated with issuing miles. It also has the effect of moving a quarter billion dollars of passenger revenue out of past years and into the present, making the present look better than it otherwise would have as a result.

Continue Reading »

Oct 27 2018

Doug Parker wants to outsource U.S. maintenance jobs. That probably makes sense for the airline. Their mechanics though now realize the public claim about the importance of ‘protecting American jobs’ was self-serving nonsense.

Continue Reading »

Oct 26 2018

American’s financials show they only make money on their frequent flyer program, and are not making money flying passengers.

American has earned pretax income of $1.5 billion year-to-date, while $1.8 billion was booked as immediate marketing revenue from sale of miles which comes at almost no cost

Continue Reading »

Oct 25 2018

American’s stock hit new lows yesterday in advance of today’s earnings call. That left the airline in a tough position, needing to explain how they’d cut costs which are rising at a faster rate than revenues.

I listen to the earnings call with a different perspective than most people covering them. I’m interested in news about the loyalty program, about the product, and about how changes to the business are likely to impact the way customers interact with the airline — as well as what we can expect from the overall direction in the industry.

As a result some of the six things that stuck out for me are likely to be different than key takeaways elsewhere, and are things you may otherwise miss.

Continue Reading »

Oct 25 2018

This week we learned that American Airlines is gutting the ability to earn elite qualifying dollars from credit card spend for next year.

Barclays representatives are saying that they are unable to upgrade customers from Red to Silver at this time and that this is a requirement of American Airlines because of a loophole created by this change.

Continue Reading »

Oct 24 2018

Basic economy is an attempt by the major airlines to raise revenue by offering a worse product.

The notion here is that the cheapest fares get called basic economy, and you have to spend more to avoid those restrictions. It’s a price increase that applies to customers that are willing to pay more to avoid the least comfortable travel an airline offers.

Continue Reading »