Mr. North wrote:"WJ posts 45% fall in Q1 profit"
It sounds worse than it actually is. Did people think cheap oil would last forever?!
WJ's operating profit in 1Q 2017 was down 34.3% yoy.
The industry collective operating profit, including the 11 North American publicly traded sched carriers that have reported 1Q 2017 thus far, (ie all but AC), dropped from $5.765b in 1Q 2016 to $3.259B in 1Q 2017, or down an average of 43.5%.
WJ was one of the better performers in the bigger scheme of things. Only Southwest, (down 30.3%), Delta, (down 31.6%), Hawaiian (down 30.6%) and Skywest, (up 23.4%), did better.
I wonder where AC will fit in when they report on Friday. We all know that companies always release stellar numbers on Fridays.
If they match WJ's YoY decline of 34.3%, that puts their 1Q operating profit at about $119.7M. Subtract interest payments of about $83m, because bankers don't like it when airlines don't pay interest on loans for those shiny new aircraft, and that indicates a true operating profit of about $35m on revenues of about $3.5b, which is getting into rounding error territory.
That compares to WJ's actuals of $65.3m on revenues of $1.11B. Twice the profit on 1/3 the revenues for those paying attention.
Should AC's operating margin decline be closer to the industry average, (and let's face it, AC rarely beats industry average in any metric that matters), the operating profit would slide to about $87m. Subtract $83m +/- of interest and we're back to a break-even proposition with oil at $50bbl.
It'll be interesting to see how this back of the envelope math compares with actuals released Friday morning.
Addendum: Like I said, AC rarely beats industry average in any metric that matters. By far the worst numbers of any publicly traded airline in North America. So much for the big turnaround.
(but maybe its a good thing when that's all there is to talk about)
