Just before Easter, United airlines was in the news regarding taking a passenger off the airplane because the plane was overbooked and staff had to fly. Since then, it has apologized and increased the incentive from $400 to up to $10,000. One of the considerations to flying is at one price would you give up your seat? Airlines in general are under heavy price pressure (their customers do not want to pay anymore than they absolutely have to or would like to pay less). On the other hand, over the past number of years there are fewer airlines or some have a near monoploy in their homebase areas or Hubs. In the analysis of the airlines, one of the important elements is revenue per available seat mile (RASM). The RASM measures the revenue earned for every mile each seat has flown and gnerally the higher the RASM, the better the profitablity.

Paul Hoyda of Thomson Reuters examined the top North American airlines based on passenger revenue per seat mile.  Another criteria was:

Enterprise value to earnings before interest, taxes, depreciation and amortitzation (EV/EBITDA). This figure is used because of airlines have high fixed costs and significant depreciation of airplanes. The higher the figure, the better.

Company                          Mkt Cap             Passenger              EV to                  Dividend

(US $ Bil)           RASM                      EBITDA              Yield (%)

Delta Air Lines                33.678                0.1341                    4.06                      1.8

American Airlines          21.335               0.1265                     4.99                       0.9

Southwest Airlines         33.359               0.1252                     6.74                       0.7

United Continental          22.501              0.1240                      4.28                      n/a

Hawaiian Holdings            2.582              0.1167                      4.12                      n/a

Alaska Air Group             11.014              0.1134                      6.75                       1.3

JetBlue Airways                 7.088              0.1121                       4.42                      n/a

Air Canada                          2.707             0.1035                        3.19                      n/a

WestJet Airlines                 2.007              0.0904                       4.01                      2.5

SkyWest                              1.647               0.0895                       6.29                      1.0

Linking to dividend paying stocks, the good thing about this chart are two very specific numbers for you to know if you are investing in airlines. For some distances, it is better to travel by airlines and whether you fly once a year or more than that, going on a plane is better. If you wish to invest in the airlines, you will likely have a bais on where you live, but you can check the RASM on a quarterly basis, to see if your experience is similar to others who fly.

There are more questions than answers, till the next time – to raising questions.