Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs</li>
<li>Our detailed analysis of Southwest's financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector</li>
<li>Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite</li>
</ul>


Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
Our detailed analysis of Southwest's financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite


Southwest Airlines: Dissecting the Drivers of Profitability Drag

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Southwest Airlines Co.'s Q1 2024 earnings reveal a mixed bag with several strengths and challenges.</li><li>The company reported record Q1 operating revenues and passengers, marking the eighth consecutive quarter of record top-line performance.</li><li>Managed business revenues were up 25% year-over-year, and the company saw an improvement in almost all operational and customer metrics.</li></ul>

Southwest Airlines Co.'s Q1 2024 earnings reveal a mixed bag with several strengths and challenges.The company reported record Q1 operating revenues and passengers, marking the eighth consecutive quarter of record top-line performance.Managed business revenues were up 25% year-over-year, and the company saw an improvement in almost all operational and customer metrics.

Southwest Airlines: Revenue Enhancement through Robust Marketing and RM System Tuning! - Major Drivers

<ul><li>Southwest Airlines Co.'s fourth-quarter 2023 earnings underscored some significant strides the company has taken over the past year, balanced by the ongoing challenges that the airline industry continues to face.</li><li>In terms of the positive highlights, CEO Bob Jordan commended the company for its impressive resilience, noting that they had successfully implemented a comprehensive winter weather action plan, fully staffed their operation, and restored their network following a disruptive winter storm in 2022.</li><li>Furthermore, the company saw improvement in almost every operational metric, maintained a 99% completion factor across the year, and secured nine labor agreements in a year.</li></ul>

Southwest Airlines Co.'s fourth-quarter 2023 earnings underscored some significant strides the company has taken over the past year, balanced by the ongoing challenges that the airline industry continues to face.In terms of the positive highlights, CEO Bob Jordan commended the company for its impressive resilience, noting that they had successfully implemented a comprehensive winter weather action plan, fully staffed their operation, and restored their network following a disruptive winter storm in 2022.Furthermore, the company saw improvement in almost every operational metric, maintained a 99% completion factor across the year, and secured nine labor agreements in a year.

Southwest Airlines: Recovering Demand and Network Optimization! - Major Drivers

<ul><li>Southwest Airlines managed to exceed analyst expectations in terms of revenue as well as earnings.</li><li>The demand environment, particularly for leisure travel, is resilient as it sees solid bookings all over this busy summer travel season.</li><li>We give Southwest Airlines a 'Hold' rating with a revised target price.</li></ul>

Southwest Airlines managed to exceed analyst expectations in terms of revenue as well as earnings.The demand environment, particularly for leisure travel, is resilient as it sees solid bookings all over this busy summer travel season.We give Southwest Airlines a 'Hold' rating with a revised target price.

Southwest Airlines Company: 4 Key Factors Driving Their Future Growth - Financial Forecasts

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Thematic (Sector/Industry)

<ul><li>The number of weekly flights between China and the U.S. will increase again next month, sparking hopes that more supply will put downward pressure on sky-high ticket prices.</li><li>But industry insiders warned that the cost of a ticket won’t drop significantly anytime soon, as low travel demand means American airlines are taking a “cautious” approach to resuming operations.</li><li>From Nov. 9, Chinese carriers will be able to operate 35 weekly round-trips to the U.S., according to a U.S. Department of Transportation order issued Friday. </li></ul>

The number of weekly flights between China and the U.S. will increase again next month, sparking hopes that more supply will put downward pressure on sky-high ticket prices.But industry insiders warned that the cost of a ticket won’t drop significantly anytime soon, as low travel demand means American airlines are taking a “cautious” approach to resuming operations.From Nov. 9, Chinese carriers will be able to operate 35 weekly round-trips to the U.S., according to a U.S. Department of Transportation order issued Friday. 

More China-U.S. Flights Unlikely to Bring Down High Ticket Prices 

United States

United Airlines Holdings Inc is an airline holding company.  The Company owns and operates airlines that transports persons, property and mail throughout the United States and abroad.

American Airlines Group Inc. operates an airline that provides scheduled passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe, and the Pacific.  The Company also provides connecting service throughout the United States, Canada, and the Caribbean.

Alaska Air Group, Inc. is an airline holding company. The Company, through its subsidiaries, provides air service to passengers in multiple destinations. Alaska Air also provide freight and mail services, primarily to and within the state of Alaska and on the West Coast.

SkyWest, Inc. operates regional airlines that offer scheduled passenger service to destinations in the United States, Canada, Mexico, and the Caribbean.

Delta Air Lines, Inc. provides scheduled air transportation for passengers, freight, and mail over a network of routes throughout the United States and internationally.

JetBlue Airways Corporation provides nonstop passenger flight service through its Airbus A320 aircraft.  The Company's airline is based in New York's John F. Kennedy Airport and currently flies to various destinations in the United States.

Allegiant Travel Company is a leisure travel company. The Company operates a passenger airline marketed to leisure travelers in small cities.

Hawaiian Holdings, Inc. provides scheduled and charter air transportation of passengers, cargo, and mail.  The Company provides its services among the islands of Hawaii and between Hawaii and several West Coast gateway cities and destinations in the South Pacific.

Spirit Airlines Inc. is a low-fare airline based in Miramar, Florida. The Airline provides low-cost travel opportunities principally to and from South Florida, the Caribbean and Latin America. Spirit Airlines basic service combines with a range of optional services for additional fees, targets price sensitive leisure travelers and travelers visiting friends and relatives.

C.H. Robinson Worldwide, Inc. provides multimodal transportation services and logistics solutions. The Company operates a network of offices in North America, Europe, Asia, South America, and the Middle East. C.H. Robinson provides a variety of logistics services, such as fresh produce sourcing and freight consolidation.

Singapore Airlines Limited provides air transportation, engineering, pilot training, air charter, and tour wholesaling services. The Company's airline operation covers Asia, Europe, the Americas, South West Pacific, and Africa.

China Southern Airlines Company Limited provides commercial airline services throughout China, Southeast Asia and other parts of the world.  The Company also provides other airline related services including aircraft maintenance and air catering.

China Eastern Airlines Corporation Limited, together with its subsidiaries, operates in the civil aviation industry. It offers passenger, cargo, mail delivery, ground, cargo handling, and other extended transportation services.

ANA Holdings Inc provides a variety of air transportation-related services. The Company offers scheduled & unscheduled air passenger services and air courier services. ANA sells aircraft parts and provides travel arrangement & reservation services as well.

Air China Limited provides passenger, cargo, and airline-related services in China.  The Company is primarily based in Beijing and a major hub for domestic and international air transportation.  Air China's airline-related services include aircraft maintenance, repair, overhaul service, ground services, and in-flight catering services.

International Consolidated Airlines Group S.A. provides transportation services. The Company offers international and domestic air passenger and cargo transportation services. International Consolidated Airlines Group serves customers worldwide.

International Consolidated Airlines Group (IAG LN)

International Consolidated Airlines Group

LATAM Airlines Group S.A. is an airline that provides both domestic and international flight services.  The Company provides passenger and cargo services to destinations in Chile, South America, the Caribbean, Europe, North America, and the Pacific.  LATAM Airlines operates passenger aircraft and cargo freighters.

InterGlobe Aviation Limited provides passenger airlines services. The Company offers ground management, air transportation, terminal maintenance, and other services. InterGlobe Aviation conducts its business globally.

Turk Hava Yollari Anonim Ortakligi (THY), also known as Turkish Airlines, provides passenger and cargo air transportation services. The Company serves all domestic destinations as well as the Middle East, North America, Europe, Asia, North Africa and South Africa.

Cathay Pacific Airways Limited operates scheduled airline services. The Company also provides related services, including airline catering, aircraft handling, and engineering.

Southwest Airlines Co. is a domestic airline that provides primarily short-haul, high-frequency, point-to-point service.  The Company offers flights throughout the United States.

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Southwest Airlines Co (LUV US)

Southwest Airlines: Dissecting the Drivers of Profitability Drag

Deep dive disaggregating the key drivers of Southwest Airlines's underperformance of its fellow US majors, ranking it alongside the bottom tier of...

Neil Glynn

Southwest Airlines: Revenue Enhancement through Robust Marketing and RM System Tuning! - Major Drivers

Southwest Airlines Co.'s Q1 2024 earnings reveal a mixed bag with several strengths and challenges. The company reported record Q1 operating...

Baptista Research

Southwest Airlines: Recovering Demand and Network Optimization! - Major Drivers

Southwest Airlines Co.'s fourth-quarter 2023 earnings underscored some significant strides the company has taken over the past year, balanced by...

Baptista Research

Southwest Airlines Company: 4 Key Factors Driving Their Future Growth - Financial Forecasts

Southwest Airlines managed to exceed analyst expectations in terms of revenue as well as earnings. The demand environment, particularly for...

Baptista Research

More China-U.S. Flights Unlikely to Bring Down High Ticket Prices

The number of weekly flights between China and the U. S. will increase again next month, sparking hopes that more supply will put downward...

Caixin Global

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