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Spirit Tops All LCCs with 7% profit margin in Q1

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gatorbird

What readfile?
Joined
Mar 2, 2004
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144
This one should be spread throughout the bases by today:

UPDATE: Airlines Make It Four In A Row, Profit Margin-wise

June 25, 2007: 06:34 PM EST


SAN FRANCISCO (Dow Jones) -- For the first time since 2000, the airline sector as a group turned an operating profit from January to March, according to data released Monday by the U.S. Department of Transportation that covers 21 selected passenger airlines.
The system operating profit margin came to 2.7% in the first quarter vs. a loss margin of 1.3% in 2006, making for the fourth-consecutive profitable quarter. Operating margin measures profit or loss as a percentage of the total operating revenue.
Breaking it down into the three categories, regional carries posted a profit margin of 6.3%, while the network carrier group came in at 2.5% and the low-cost carriers at 2.3%, the study showed.
Network carriers such Continental Airlines (CAL) and American Airlines (AMR) reported a combined operating profit of $559 million in the first quarter, up from a loss of $711 million a year ago.
United Airlines (UAUA) and Alaska Air Group (ALK) were the only two of the seven network carriers to post losses. Northwest (NWA) pocketed the most at $205 million .
In the low-cost group, Spirit Air enjoyed the best profit margin at 7%, while Frontier Airlines (FRNT) , JetBlue Airways (JBLU) and ATA Airways all handed in losses.
The regional carriers turned in the strongest results, with only Mesa Air Group (MESA) taking a loss in the first quarter. Atlantic Southeast and American Eagle turned in operating profit margins of 12.9% and 11.2%, respectively.
As for expenses, U.S. Airways (LCC) , Comair and American Eagle carried the highest unit costs while JetBlue, Southwest and Spirit were the lowest.
The airline group traded fractionally lower Monday, with most issues on the Amex Airline Index fading more than 1%. Frontier Airlines , Southwest and SkyWest (SKYW) were the exceptions, up just slightly.

I'd bet Indigo & Co. would have rather this news not made any headlines...

"Take it Back!"

gator
 
Aay had a profit margin of nearly 12%,but since it is traded on the Nasdaq is not included in that report. Granted it was on the backs of its employee group, with their horrible wages, so its nothing to be proud about.
 
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tomba187 said:
Aay had a profit margin of nearly 12%,but since it is traded on the Nasdaq is not included in that report. Granted it was on the backs of its employee group, with their horrible wages, so its nothing to be proud about.
Click to expand...


That's the point of the post, tomba187. Spirit pilots' compensation package is one of the lowest in the industry; AAY is even lower. I'm all for competitive operating costs, but there shouldn't be such a gap. And, until we demand from them otherwise, these airlines' cash-cow tactics will continue. Did you happen to notice Atlantic Southeast's operating profit margin? Wanna take a guess how long they've been working under a sub-par contract?

And if we were to merge with an Atlanta-hubbed airline, I'll take DAL, thank you. For the record, though, I'll have to agree with Shrek--mergers can get ugly, and Spirit would probably end up on the less-fortunate side of the line.

gator
 
gatorbird said:
That's the point of the post, tomba187. Spirit pilots' compensation package is one of the lowest in the industry; AAY is even lower. I'm all for competitive operating costs, but there shouldn't be such a gap. And, until we demand from them otherwise, these airlines' cash-cow tactics will continue. Did you happen to notice Atlantic Southeast's operating profit margin? Wanna take a guess how long they've been working under a sub-par contract?

And if we were to merge with an Atlanta-hubbed airline, I'll take DAL, thank you. For the record, though, I'll have to agree with Shrek--mergers can get ugly, and Spirit would probably end up on the less-fortunate side of the line.

gator
Click to expand...

You and I don't have a choice who our airlines decide to merge with, just ask Midwest.
 
gatorbird said:
That's the point of the post, tomba187. Spirit pilots' compensation package is one of the lowest in the industry; AAY is even lower. I'm all for competitive operating costs, but there shouldn't be such a gap. And, until we demand from them otherwise, these airlines' cash-cow tactics will continue. Did you happen to notice Atlantic Southeast's operating profit margin? Wanna take a guess how long they've been working under a sub-par contract?

And if we were to merge with an Atlanta-hubbed airline, I'll take DAL, thank you. For the record, though, I'll have to agree with Shrek--mergers can get ugly, and Spirit would probably end up on the less-fortunate side of the line.

gator
Click to expand...

AAY if im not mistaken is Allegiant. Did you mean AAI (Airtran)? Just Curious. If you meant Airtran our payscales are nearly identical to Spirits. Even better if you base it on the 319. Plus the soft pay in the current contract is unbeatable. However if this new TA takes effect (which it wont) that will be gone.

I cant think of one merger that the pilots of the "bought" airline thought worked out well. :(
 
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FlyAirtran said:
AAY if im not mistaken is Allegiant. Did you mean AAI (Airtran)? Just Curious. If you meant Airtran our payscales are nearly identical to Spirits. Even better if you base it on the 319. Plus the soft pay in the current contract is unbeatable. However if this new TA takes effect (which it wont) that will be gone.

I cant think of one merger that the pilots of the "bought" airline thought worked out well. :(
Click to expand...
He was talking about Allegiant....Did Airtran have a 12% profit margin?
 
FlyAirtran said:
I cant think of one merger that the pilots of the "bought" airline thought worked out well. :(
Click to expand...

Well, you should talk to the guys who flew for Flying Tigers, after being "bought" by FedEx.
 
enigma said:
Spirit is not publicly traded. Spirit belongs to Oaktree Capital and Indigo Partners (Texas Pacific Group).
Click to expand...

I knew they weren't public. So why are they press releasing a specific profit margin when: A. it doesn't matter and B. there is no real way to proove it as the company is not beholden to anyone to justify the numbers they come out with?
 
IronCityBlue said:
I knew they weren't public. So why are they press releasing a specific profit margin when: A. it doesn't matter and B. there is no real way to proove it as the company is not beholden to anyone to justify the numbers they come out with?
Click to expand...


You asked about the ticker symbol, do private companies have ticker symbols?

There could be many reasons that they released the profit info. Foremost would be Spirit's well known plan to accomplish an IPO. In order to hit an home run in the market, potential investors (stock buyers) need to know that the company is profitable before they invest. It's quite simple actually.

All airlines, public or private, must release certain data to the US Dept of Transportation. Financial performance, albeit limited, is part of the DOT form 41.

Finally, what do you care?
 
RedTailSwinger said:
First: Which Airbus operator has a contract that you would rather have than Spirits?

Second: Why did you accept the job at Spirit if they are the lowest in the industry?
Click to expand...

First: As for the encompassing contract as a whole, I can't say. I am not entirely familiar with the QOL language in other Airbus operators' contracts, but am mostly pleased with my own. I believe I have aired this in other posts. There are areas that could (always) use improvement, but as a commuter that values time at home, I'm happy with my job.

The reason for the post was PAY, so here goes:

I took averages of the following carriers that fly A320 family aircraft (318s, 19s, and 20s...excluded the 21): United (Ted), USAir (east and west payscales), Frontier, and JetBlue.

I looked at the following longevity: FO- 2, 3, and 5 years. CA- 3, 8 and 12 years.

The result? FOs averaged -10%, -18% and -18%, respectively. CAs averaged -12%, -6.5% and -6.5%, respectfully.

Second: I accepted the job for a multitude of reasons. I had an opportunity to review the pilot contract before I ever applied here, and I realized I could enjoy a much greater quality of life at Spirit than at any regional carrier, as well as most LCCs.

I believed (still do) that the business plan of focusing on a Latin American/Caribbean market was a smart one.

With the anticipated aircraft orders, I felt could advance fairly quickly (seniority-wise) within an organization poised for growth.

As enigma said, I could get an A320 type rating coming out of the gate. Valuable asset if the stuff ever hit the fan. Plus, it beat a turboprop (thanks, enigma).

As well, I had met many Spirit pilots I thought I would enjoy working with. This has held very true.

With all of that said, why should I not believe the pilot group at this airline does not deserve to be at least par with their counterparts in compensation? That was the purpose of the post, after all. We all have made sacrifices the last 6 or 7 years. Airlines have had trouble turning profits. Pilots have been furloughed. Jobs have been scarce. But now? Profits are beginning to rise. Costs are down. Airlines are leaner, more efficient. Newer aircraft burn less fuel (ie NK--MD vs Airbus).

I don't believe we should demand so much from a company that it renders them uncompetitive. That said, why should work groups continue to accept sub-par compensation while hedge-fund managers, upper management brass, and other select few enjoy resounding profits that line their portfolios?

thanks for listening,

gator
 
enigma said:
You asked about the ticker symbol, do private companies have ticker symbols?

It was a retourikal kwestshin.

There could be many reasons that they released the profit info. Foremost would be Spirit's well known plan to accomplish an IPO.

That was the only spin I could think of that made any sense.

In order to hit an home run in the market, potential investors (stock buyers) need to know that the company is profitable before they invest. It's quite simple actually.

Yes, it is simple. I bet SkyBus will soon post some rosy numbers as well in advance of their impending IPO. Expect the phrase "Ryan model of Europe" and mention of high load factors to be thrown around every milisecond leading up to their IPO, regardless of their actual financial viability or lack thereof, which brings me to:

All airlines, public or private, must release certain data to the US Dept of Transportation. Financial performance, albeit limited, is part of the DOT form 41.

And all airlines have the ability to move things around the balance sheet quarter to quarter to get the short term "results" they want. Ever hear of the infamous "one time charges" as just one example? Don't underestimate the power of spin when it comes to quarterly profit/loss reports from airlines, as they have plenty of shells they can hide the rock under to get the results they want/need (i.e. in contract negotiations versus in advance of an IPO).

Finally, what do you care?
Click to expand...

Just trying to keep a finger on the pulse of what's going on around the industry. I have nothing against Spirit or their pilots. Maybe there is a backroom deal going on with JetBlue for all I know. In any case, is Spirit kicking but and taking names, entrenching themselves as one of the nations premier LCC's? Possibly. Are they running up the numbers to cork their bat as they go to the plate and swing for the fences in an IPO? Not out of the realm of possibility either.

Finally, why so defensive?
 
companies have to post a profit margin for 4 quarters before going public. generally that is the ONLY reason they do it.
 

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