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Airline KPI Guide

Airline KPI Guide

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0% found this document useful (0 votes)
139 views14 pages

Airline KPI Guide

Airline KPI Guide

Uploaded by

skybookglobal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Guide to

Airline KPIs
for Investment Professionals
In This Guide
This guide highlights the key performance indicators for the
airline industry and where investors should look to find an
investment edge. While this guide is not a full airline industry
primer, as the market leader in granular consensus estimates
data, Visible Alpha works with partners and clients to
determine the key airline metrics that will aid market
participants in identifying airline trends and future
performance of airline companies – including Southwest
Airlines, Air Canada, Cathay Pacific and more – by region,
sub-industry and carrier type.

VIEW ONLINE VERSION

Visible Alpha Industry KPIs - 2


Industry Overview

The airline industry is made up of companies whose primary business


activities are focused on air transportation for passengers and cargo and
includes major network carriers, regional carriers and low-cost carriers.

This eBook Includes:

➔ Industry Business Model


➔ Business Model Diagram
➔ Key Airline Metrics
➔ Visible Alpha’s Standardized Industry Metrics
➔ Available Comp Tables
➔ Industry KPI Terms & Definitions
➔ An Introduction to Visible Alpha

Visible Alpha Industry KPIs - 3


Airline Business Model
Capacity metrics like available seats miles (ASM) are often analyzed in order
to get a sense of seat supply and its implications on pricing. Capacity is
multiplied by a utilization metric (load factor) to arrive at revenue passenger
miles (RPM), a metric for the number of passenger miles that generate
revenue. RPM is multiplied by a yield metric (passenger yield) to arrive at total
revenue for passengers. A similar calculation is often done for the cargo
revenue as well. The addition of both passenger and cargo revenue leads to
total revenue.

A number of expenses are subtracted from the revenue. Labor, fuel, airport
landing fees and maintenance costs are all important expenses for an airline.
CASM-Ex captures all costs excluding fuel on a per available seat mile basis.

For profitability, EBIT, EBITDA and EBITDAR are all a focus. EBITDA is
looked at due to the industry’s high depreciation and amortization costs, while
EBITDAR is also analyzed to normalize for each company’s different
accounting treatments of their rent expenses.

Airlines are generally modeled on a per available seat mile (ASM) or kilometer
(ASK) basis in order to analyze the unit economics of each business.
Revenue is often looked at on a revenue per available seat mile basis (RASM)
or passenger revenue per available seat mile (PRASM) basis.

Visible Alpha Industry KPIs - 4


Industry Schematic Diagram

Visible Alpha Industry KPIs - 5


Key Airline Metrics
When understanding market expectations for airlines, whether at a company or
industry level, here are some airline KPIs to consider:

● Available seat miles (ASM)


● Revenue passenger miles (RPM)
● Passenger Load Factor
● Revenue per Available Seat Mile (RASM)
● Passenger Revenue per Available Seat Mile (PRASM)
● Cost per Available Seat Mile (CASM)
● CASM-Ex Fuel (CASM-Ex)

...and more!

Current Airline KPI


Forecasts

Visible Alpha offers detailed


consensus estimates for key
performance indicators for airlines
companies, sourced from the
world’s leading equity analysts.
Uncover current market
expectations through our
ACCESS THE DATA
consensus estimates data on
capacity metrics, utilization
metrics and more to identify
airline trends and future
performance of airline companies.

Visible Alpha Industry KPIs - 6


DATA AS OF JANUARY 2023

Visible Alpha’s Standardized


Industry Metrics
To understand market expectations for the airline industry, a key information
source is sell-side analyst estimate and consensus forecast data. The buy
side, sell side and public companies leverage this type of data to conduct
competitive analysis, a type of analysis conducted by professional analysts
that involves comparing standardized metrics of one company with those of
similar companies. Because companies report metrics differently – and
sometimes report on different metrics altogether – standardizing the key
metrics for each company can be a cumbersome process.

Visible Alpha Insights includes analyst data, company data and industry data
at level of granularity unparalleled in the market. Our industry data –
Standardized Industry Metrics – enables market participants to quantify and
compare market expectations for companies across 184 industries.

Our Airlines Industry Data Set Includes:

48
Global Tickers
69
Contributing Brokers
575
Current Analyst Excel Models

218
Unique line items in
212
Unique line items in our
430
Total standardized
our standardized standardized operating line items
financials data metrics data

Visible Alpha Industry KPIs - 7


Available Comp Tables
Consensus Estimates

Visible Alpha offers 18 airline comp tables, comparing forecasts for key
financial and operating metrics, to make it easy to quickly conduct relative
analysis, whether you are interested in looking at key values for Southwest
Airlines competitors or global airline passenger yield. Every pre-built,
customizable comp tables is based on region, sub-industry or key operating
metrics. All comp tables are fully customizable.

Visible Alpha Industry KPIs - 8


Available Comp Tables
Consensus Estimates

Visible Alpha Industry KPIs - 9


Financial and Operating KPIs Available
for 38 Airlines Including:

North America EMEA

● American Airlines (AAL) ● International Airlines Group


● Delta Air Lines (DAL) (IAG)
● JetBlue Airways (JBLU) ● Air France–KLM (AFLYY)
● Southwest Airlines (LUV) ● Lufthansa (DLAKY)
● United Airlines (UAL) ● Ryanair (RYAAY)

LATAM APAC

● Azul (AZUL) ● Air China (AICAF)


● Copa (CPA) ● China Eastern Airlines (CEA)
● Gol Linhas Aereas Inteligentes ● China Southern Airlines (ZNH)
(GOL) ● Japan Airlines (JAPSY)
● LATAM Airlines (LTM) ● Singapore Airlines (SINGF)
● Volaris (VLRS)

REQUEST A FULL LIST

Visible Alpha Industry KPIs - 10


Industry KPI Terms & Definitions
Available Seat Miles (ASM)
Available seat miles is a measure of airline capacity and is calculated by taking the number of seats
available and multiplying by the distance flown.

Available Seat Kilometers (ASK)


Available seat kilometers is a measure of airline capacity and is calculated by taking the number of
seats available and multiplying by the distance flown.

Cost per Available Seat Mile (CASM)


Cost per available seat mile is a measure of efficiency and is calculated by taking operating
expenses and dividing by ASM.

Cost per Available Seat Kilometer (CASK)


Cost per available seat kilometer is a measure of efficiency and is calculated by taking operating
expenses and dividing by ASK.

Revenue per Available Seat Mile (RASM)


Revenue per available seat mile is calculated by dividing the airline’s total revenue by its total
available seat miles.

Revenue per Available Seat Kilometer (RASK)


Revenue per available seat kilometer is calculated by dividing the airline’s total revenue by its total
available seat kilometers.

Passenger Load Factor


Passenger load factor is a measure of utilization, passenger load factor is the number of Revenue
Passenger Miles (or Kilometers) expressed as a percentage of ASMs (or ASKs).

Airport Charges
Airport charges are expenses paid by airlines for the use of airport facilities, including aircraft
landing, freight and other charges related to the use of airport infrastructure such as runways and
terminals.

Passenger Yield (in miles)


Passenger yield is a measure of average fare paid per mile, per passenger, calculated by dividing
passenger revenue by revenue passenger miles (RPMs).

Passenger Yield (in kilometers)


Passenger yield is a measure of average fare paid per mile, per passenger, calculated by dividing
passenger revenue by revenue passenger kilometers (RPKs).

Visible Alpha Industry KPIs - 11


Industry KPI Terms & Definitions
Total Revenue per Available Seat Mile (TRASM)
Total revenue per available seat mile is calculated by dividing total revenue by available seat miles.

Total Revenue per Available Seat Kilometer (TRASK)


Total revenue per available seat kilometer is calculated by dividing total revenue by available seat
kilometers.

Passenger Revenue per Available Seat Mile (PRASM)


Passenger revenue per available seat measured is calculated by dividing passenger revenue by
available seat miles. PRASM is also equivalent to the product of load factor and passenger yield.

Passenger Revenue per Available Seat Kilometer (PRASK)


Passenger revenue available per seat kilometer is calculated by dividing passenger revenue by
available seat kilometers. PRASK is also equivalent to the product of load factor and passenger
yield.

Revenue Passenger Miles (RPM)


Revenue passenger miles is a measure of volume and is calculated by taking the number of
passengers and multiplying by miles of flight.

Revenue Passenger Kilometers (RPK)


Revenue passenger kilometers is a measure of volume and is calculated by taking the number of
passengers and multiplying by kilometers of flight.

CASM-Ex Fuel (CASM-Ex)


CASM-Ex Fuel is calculated by taking operating expenses, dividing by ASM and then subtracting
the cost of fuel.

CASK-Ex Fuel (CASK-Ex)


CASK-Ex Fuel is calculated by taking operating expenses, dividing by ASK and then subtracting the
cost of fuel.

EBITDAR
Earnings before interest, taxes, depreciation, amortization, and restructuring or renting costs.

Visible Alpha Industry KPIs - 12


Enhance Your Fundamental Analysis
Visible Alpha is a part of S&P Global, creating a premium offering of fundamental
investment research capabilities with S&P Global Market Intelligence’s Capital IQ Pro
platform. Visible Alpha's deep, granular consensus and broker estimates data
complements Capital IQ’s broad estimates solution. The combination of our businesses
allows us to offer an incredibly comprehensive platform for financial analysis, and our goal
remains the same: to help you make more informed decisions while saving time and
increasing efficiency.

Visible Alpha’s deep consensus data provides a quick understanding of the sell-side view
on companies and industries at a level of granularity, timeliness and interactivity that has
never before been possible.

What Users Like Most About Using Visible Alpha Insights:

● Granularity of data ● Revisions analysis


● Quality of data ● Model downloads
● Data transparency ● Excel Add-In

“I used to spend 5 hours doing research and analysis, now I spend 2 minutes.”
— Analyst, $1.5B Directional Hedge Fund

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