American--Without Bankruptcy--Has Lowest Cost-Per-Available Seat of Legacy Carriers; Guess Who Has the Lowest Cost?

Every once in a while I come across a statistic that surprises me, and a recent Wall Street Journal article detailing labor relations between American Airlines and its pilots included a sidebar that revealed that among the so-called "legacy" carriers, American Airlines enjoys the lowest cost-per-available seat mile.

That figure is derived by taking an airline's available seat miles and dividing it into an airline's operating cost.  The three airlines with the highest cost as of the third quarter of 2006?  Three airlines that are either in, or have recently been in, bankruptcy: US Airways (with a 1.57 cents cost to fly a passenger a mile), Northwest (14.2 cents), and Delta (13.9 cents).

Two airlines that didn't declare bankruptcy in the last five years managed to have lower costs--Continental (13.4 cents) and American (12.6 cents).  United, which is still in bankruptcy, lands in the middle of Continental and American; it costs United 13.2 cents to fly each available seat mile.

Keep in mind airlines including United, Delta, Northwest, and US Airways used their time in bankruptcy to, in some cases, get rid of big pension obligations, renegotiate airplane lease agreements, slash workers' salaries and perks, and change work rules. 

Nothing wrong with any of that, of course. 

I just find it very interesting that American, which managed to keep its pension plan afloat (though the airline needs a string of profitable years to top it off) has comparatively lower costs than competitors who used bankruptcy as a way of cutting back.  That's a testament to the airline's executives and workers who put their heads together to figure out how to cut costs and boost productivity.  It's often been said, "Bankruptcy just forces lawyers and creditors to do what management ought to do."  In American's case, management and workers stepped up to the plate.

And what about the former upstart airline that is now the new, 900-pound gorilla in the business, Southwest?  Helped along by a highly motivated staff and fuel prices locked in years ago at earlier, lower levels, Southwest has costs of only 8.7 cents per available seat mile--a big competitive advantage.