US Airlines - Second Tier Strives for Financial Sustainability

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

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<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

Southwest Airlines Co

Southwest Airlines: Dissecting the Drivers of Profitability Drag