What are the combined assets and combined average return on assets for the top seven airlines?

Question

Southwest + United + Delta + USAir + Northwest + Continental + American.

I am currious why the airlines stuggle so much which investing such incredible dollars in assets.

Answer 1

Yes, they have huge assets, but they also have very high costs. For example, you used to be able to fly coast to coast for $100 or so. Well, people still remember those prices even though it's benn almost 30 years since those prices were prevalent.

So while salaries, benefits, and fuel increase, the increase in ticket prices has not been able to keep up. Why? Because, of the competition between the airlines in the US. It's about the only market in the world like this where the barriers to entry are pretty low, thus allowing new carriers to continually start up to put downward pressure on legacy carriers' prices.

Add in to the mix, workers who want more and more, while the government continues to increase taxes, and you've got a formula for trouble. For an impact on taxes, try pulling up a "cheap" flight from like Chicago to St. Louis or Houston to Cancun. See what the fare would be and what % of your total price is taxes. Now, think how little of the total amount, the airlines are getting.

You've already seen the price of crude oil approach $74 dollars, right? Well, the price that the airlines pay for jet fuel is even higher. Not only do they pay the price for fuel, but they also pay for the refining costs (crack spread) which lately has been out of control, adding as much as $20 or so per barrel!

Anyways, if you still really want the numbers (for the combined assets, etc), let me know privately. I can get them pretty quickly from a database I've got access to.

Hope that helps!

Edit: Apparently, you can still get a ticket for $99 coast to coast. Another example of flat to declining revenue with increasing costs!

$99 -- United Launches Coast-to-Coast Sale
http://www.travelzoo.com/Top20.asp?id=100312526
Source: United Airlines

Answer 2

The have large assets but they also have huge liabilites which offset those assets in the debt owed for the airplanes.

Assets = Liabilities + net worth.

They struggle because they're operating on very thin margins with fuel and maintenance being a critical factor. Competition between airlines is fierce.
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