Transportation & Logistics

Spirit and its competitors have seen their EV/EBITDA decrease in the last six months due to the fear of a large increase in available seat miles.

For the seventh consecutive year, Alaska Airlines held the top spot in Customer Satisfaction among the Traditional Network Carriers survey conducted by J.D. Power.

Spirit (SAVE) ranks first in profitability among seven airlines in the United States. The main driver for this ranking comes from its exceptional ability to manage costs.

Spirit Airlines (SAVE) follows a simple business model of reducing base airfares as much as possible. All its other services are charged separately.

While a section of the market is readying itself for a rate hike in the upcoming meeting of the FOMC, there are others who don’t believe that a rate hike would be implemented and instead, are focused on falling inflation.

Smaller ETFs that provide exposure to the courier services industry include Buyback Achievers (PKW), the First Trust Capital Strength ETF (FTCS), and the MSCI Industrials Index ETF (FIDU).

The US has witnessed the emergence of a number of regional carriers such as OnTrac and Eastern Connection, which are providing cheaper, faster delivery options.

Over the past few years, the global courier services industry has managed to recover from the global economic slowdown.

The e-commerce industry is poised to grow rapidly in the future. With this growth will come the need for package delivery.

Some of UPS’s key strengths that keep it ahead of its competitors include an integrated global network, leading-edge technology, a strong brand name, a strong culture, and impressive financials.

In the recent past, there has been a surge in the use of e-commerce across the globe. The impact of this new form of commerce has been felt in each and every industry.

Standard courier services involve collecting the parcels, sorting the parcels, and transferring the parcels to the closest depot to the delivery location.

The US courier and parcel delivery services industry consists of about 7,500 companies both large and small, which have combined annual revenue of about $90 billion.

United Parcel Service is the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services. It forms the largest holding of 7.6% in IYT.

United Parcel Service (UPS), originally called American Messenger Company, was founded in 1907 by 19-year-old James E. Casey with $100 borrowed from a friend.

FedEx was formed with a vision to change the way delivery services worked prior to 1971. It established a new industry and it has been leading its peers since then.

FedEx has been in the marketplace for over 40 years. It has established a huge network spread across more than 220 countries and territories worldwide.

Salaries and employee benefits form the highest cost for FedEx. They account for ~36% as a percentage of revenue. Salary costs rose 6% for fiscal 2015.

FedEx’s (FDX) financial performance during the last few years has been extraordinary. It successfully bounced back from the recessionary downturn.

By 1983, FedEx (FDX) had become the strongest delivery business in the nation. It started a string of acquisitions in order to grow more.

FedEx has assembled a portfolio of solutions, from express and freight forwarding to critical inventory logistics, that can solve any global commerce challenge.

Capacity utilization has improved from the lows of ~57% in the 1970s to ~76% in 2014 and 81.88% in year-to-date 2015.

A strengthening dollar led to improved profitability for US airlines in 1Q15 while subduing profitability for non-US airlines. This further increased the industry’s performance gap across the globe.

Southwest Airlines posted excellent financial performance metrics in 1Q15, including ~6% growth in available seat miles.

UTC offers some products and services through UTC Building & Industrial Systems, a combination of two segments, Otis and UTC Climate, Controls & Security.

The Boeing 737 is the best-selling commercial airliner in history. Reliable and economical, the 737 dominates the short- and medium-haul markets.

Wide-body aircraft fly transoceanic routes, can accommodate 200–500 passengers, and often transport commercial cargo across the globe.

When Boeing bought McDonnell Douglas in 1996, the acquisition helped Boeing overtake Lockheed Martin as the largest defense contractor.

The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. It’s also impacted by issues like war, terrorism, and the outbreak of diseases—such as Ebola. These issues are political. As a result, they require government intervention.

More than half of China Southern’s total operating expenses in FY13 were related to flight operating expenses.

Revenue from JetBlues’ Even More Space grew at a five-year compounded annual growth rate of ~30% from $45 million in fiscal year 2008 to $170 million in fiscal year 2013.

Although trucking is the most widely used mode of transportation, the fastest growing mode of transport is by air.

Using a single aircraft type reduces disruption of operations due to maintenance efficiencies. The airline reduces training costs with standardized pilot training and maintenance routines.

Gol’s operating income turned positive in FY13 after reporting losses for two consecutive years.

SARS was another disease outbreak in 2003. SARS caused a panic similar to the current Ebola outbreak. SARS was a viral respiratory illness.

According to IATA (or the International Air Transport Association), the global airline industry passenger volume and capacity increased by 5.3% year-over-year in July 2014. Freight volume increased by 5.8%. In July load factor (or capacity utilization) for passengers was 82.3%, and for freight, it was 44.4%.

The second largest cost component for airlines is salaries, wages, and benefits. Employment in the U.S. airline industry has increased in the last couple of years when the U.S. economy recovered from the recession and demand for air travel picked up.

Available seat miles (or ASM) is the measure of airline capacity. It’s calculated as the total number of seats multiplied by the total distance travelled. While RPM (or revenue passenger miles) is a measure of demand, ASM is the measure of supply.

The airline industry is an important contributor to the U.S. economy’s growth. According to Airlines for America (or A4A), the industry drives $1.5 trillion in U.S. economic activity and more than 11 million in U.S. jobs.

Cyclical industries follow the business cycle, so their revenues are higher during economic prosperity and lower during economic contraction. The airline industry is sensitive to changes in economic growth.