US Airlines Now Balancing Strong Ticket Sales With Escalating Costs
US airlines are enjoying strong demand and ticket sales, a recent analysis by trade group Airlines for America found. But they also face significant inflationary pressures across most key cost categories that could put a damper on earnings. Delta Air Lines and United Airlines both highlighted this in their fourth quarter earnings. Unit revenues, measured by total revenues per available seat mile, increased 19% and 25.8%, respectively, in the period compared to 2019. But unit costs, measured by costs per available seat mile (CASM), excluding fuel were also up dramatically: 13% at Delta and 11% at United. “There’s no question there’s been an industry reset on costs,” United CFO Gerry Laderman said during the airline’s earnings call on Wednesday. But strong travel demand and constrained industry capacity are allowing United and other airlines to charge higher fares — as seen in its TRASM numbers — and recapture those additional expenses. Air traffic constraints were a defining feature of the industry last year. Aircraft delivery delays and understaffing across the sector often forced carriers to cut schedules throughout the year. Ultimately, US airports handled 10% fewer passengers in 2022 than in 2019, according to A4A in its state of the industry report, citing checkpoint data published by the TSA. While leisure travel has fully recovered from the pandemic plunge, corporate travel and longhaul international travel have not.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-01-20/general/us-airlines-now-balancing-strong-ticket-sales-with-escalating-costs
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US Airlines Now Balancing Strong Ticket Sales With Escalating Costs
US airlines are enjoying strong demand and ticket sales, a recent analysis by trade group Airlines for America found. But they also face significant inflationary pressures across most key cost categories that could put a damper on earnings. Delta Air Lines and United Airlines both highlighted this in their fourth quarter earnings. Unit revenues, measured by total revenues per available seat mile, increased 19% and 25.8%, respectively, in the period compared to 2019. But unit costs, measured by costs per available seat mile (CASM), excluding fuel were also up dramatically: 13% at Delta and 11% at United. “There’s no question there’s been an industry reset on costs,” United CFO Gerry Laderman said during the airline’s earnings call on Wednesday. But strong travel demand and constrained industry capacity are allowing United and other airlines to charge higher fares — as seen in its TRASM numbers — and recapture those additional expenses. Air traffic constraints were a defining feature of the industry last year. Aircraft delivery delays and understaffing across the sector often forced carriers to cut schedules throughout the year. Ultimately, US airports handled 10% fewer passengers in 2022 than in 2019, according to A4A in its state of the industry report, citing checkpoint data published by the TSA. While leisure travel has fully recovered from the pandemic plunge, corporate travel and longhaul international travel have not.<br/>
