We’ve seen some interesting commentary around second-quarter airline earnings, so we took a closer look at the recent reports from the three major US carriers most relevant to corporate travel, American Airlines (AA), Delta Air Lines (DL) and United Airlines (UA).
Simply said, the numbers don’t lie, and results matter more than words. Let’s look at some key 2nd Quarter 2025 metrics:
($ in millions except per share and unit costs)
TRASM: Total Revenue per Available Seat Mile
PRASM: Passenger Revenue per Available Seat Mile
CASM-ex: Cost per Available Seat Mile, excluding fuel
New M.O.’s comments
- Delta has the highest operating income and net income
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- Resulting from the strongest operating margin: +4.7 pts vs. AA and +3.9 pts vs. UA
- Delta’s planes are fuller than UA and AA planes as shown by their stronger load factors
- And the overall stronger results are enjoyed by shareholders with far superior Delta EPS (earnings per share) results vs. AA, and slightly better EPS results vs. UA
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- UA results were weighed down by the Newark issues and may be stronger on a go forward
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- As UA tries to emulate DL in many ways, their overall financial results have gotten stronger
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- Delta’s selling costs (as a %) are higher than both AA and UA as they pay a premium, but they get great return in both premium share and margin from their partners and customers.
- Delta is able to charge a premium for many reasons (people, culture, aircraft/product, airports, lounges, loyalty, partnerships, etc) and it’s reflected in their PRASM, TRASM and overall operating results.
- From a cost basis perspective, the key metric is CASM-ex (takes out fuel and other costs), and UA is driving a better result here.
The bottom line from New M.O.’s perspective
- What Delta is doing sure is working! Delta’s higher selling expenses are producing better quality revenues and operating margins which more than offset their CASM-ex expenses. Their superior results which entail greater investments with customers and agencies are best validated by their market cap and shareholder returns.
- As United continues to improve their overall offering, they are in pursuit of the “Delta premium.” Can they keep chipping away at selling costs and still achieve the increase in revenue premium they are hoping to drive…. time will tell.
- AA? Well, they still have a lot of work to do. To be fair, they are trying to play in a more friendly manner in the managed travel space, but they are going to have to be more aggressive in their approach, especially with partners (TMCs and customers), if they truly want to move the needle in the right direction.
