The 15 US Big Transportation Corps, with Pretax Income or Loss of at least $100 mil in either the 3Q 2011 or in the 3Q 2010, reported Total Pretax Income growth of a modest 4% in the most recent quarter.
This 3Q 2011 earnings growth of 4% was half of the 8% earnings growth registered in the 2Q 2011, and way down from the off-the-charts 131% earnings growth achieved in annual 2010 over 2009.
Here's how the US Big Transportation Sector earnings growth of 4% in the 3Q 2011 stacks up with US Big Oil.
3Q 2011 Pretax Earnings Growth over 3Q 2010:
.....15 US Big Transportation Corps..........................4%
......6 US Largest Oil Corps.....................................57%
......7 US Next Largest Oil Corps..........................107%
This huge earnings growth gap above is clearly interrelated, because fuel costs are so critical to earnings in the Transportation sector. What is happening here is a massive undesirable transfer of wealth from the Transportation sector to the Big Oil sector, and this has been going on for a decade.
I don't think it is good for the US economy for its high-quality Transportation sector's 3Q 2011 earnings growth to trail that of US Big Oil sector by such an incredibly wide gap. I think this gives a good insight into why there is such a huge wealth gap between the 1%ers and the 99% rest of the country, the Occupy Movement's major beef.
The overall US economy and US job creation won't improve dramatically until this earnings growth gap between US Big Oil vs. the rest of the US business sectors, including all of small business, is substantially closed.
So anyway, this modest 4% earnings growth in the 3Q 2011 in the US Big Transportation Corp Sector has to be bad news, right?
Well, actually just the opposite. The lesson here is the critical importance of Quality of Reported Earnings.
In annual 2010, these 15 Big Transportation Corps generated Total Pretax Income which increased a massive 131% over 2009. So, clearly the earnings base had moved up substantially.
But let me focus on the 13 Big Transportation Corps that had huge Total Fuel Costs.
In annual 2010, these 13 Big Transportation Corps had an increase of $8.4 bil in Total Fuel Costs over 2009, while generating an increase in Total Pretax Income of $14.2 bil over 2009. This illustrates the significance of high fuel costs to these Big Transportation Corps.
But check out just what happened in the 3Q 2011, when Oil Prices went through the roof.
These 13 Big Transportation Corps had an off-the-charts increase of $6.1 bil in Total Fuel costs over the 3Q 2010, or up a massive 58%, and they were still able to generate an increase in Total Pretax Income of $0.3 bil in the 3Q 2011 over the 3Q 2010.
Thus, absent the higher fuel cost, these 13 US Big Transportation Corps generated a Pretax Income increase of a huge $6.4 bil in the 3Q 2011.
Just think what the increase in Big Transportation Corp earnings would have been in the 3Q 2011 over the 3Q 2010 if Oil Prices hadn’t shot through the roof.
Clearly, the Transportation industry should be working intensely with the Obama Administration to bring down these horrendously high Oil Prices, that are causing havoc on the US economy.
Below here are the Pretax Incomes (PTI) of these 15 Big Transportation Corps in the 3Q 2011, along with comparison with the prior year’s 3Q of 2010:
.............................................3Q.........3Q............Increase
...........................................2011......2010........(Decrease)
..........................................PTI(L).....PTI(L).....Amount....%
.............................................(in millions of dollars)...........
United Parcel Service 1,551 1,540 11 1%
Union Pacific 1,453 1,273 180 14%
Burlington NoSantaFe(1) 1,236 1,127 109 10%
Norfolk Southern 884 714 170 24%
Delta Air Lines(2) 755 726 29 4%
CSX 746 702 44 6%
FedEx 724 603 121 20%
United Continental 660 387 273 71%
CH Robinson 184 166 18 11%
Expeditors Intl 177 159 18 11%
Southwest Airlines(3) 167 332 (165) -50%
Alaska Air 125 198 (73) -37%
Kansas City Southern(4) 118 88 30 34%
US Airways 97 241 (144) -60%
AMR (162) 143 (305) -213%
Total all 15 8,715 8,399 316 4%
(1) Burlington Northern Santa Fe is now part of Berkshire Hathaway, but it also files separately with the SEC.
(2) Delta Air Lines 2011 PTI excludes large Mark to Market Fuel Adjustment Charge. Its 2010 PTI excludes large Loss on Debt Extinguishment.
(3) Southwest Airlines 2011 PTI excludes large Mark to Market Fuel Adjustment Charge.
(4) Kansas City Southern 2011 PTI excludes Gain on Insurance Recovery from Hurrican Damage.
And below here are the 13 Big Transportation Corps, which have huge Fuel Costs on their income statements. The below chart shows the increase in fuel costs in the 3Q 2011 over the 3Q 2010, and also compares the increase in reported Pretax Income (Loss) with the increase in Pretax Income exclusive of that relating to the increase in Fuel Costs.
........................................................................3Q 2011
............................................................................PTI
.......................................................3Q 2011.....Increase
.......................................3Q 2011.......PTI......Exclusive of
......................................Fuel Cost..Increase.....Fuel Cost
......................................Increase..(Decrease)...Increase
..........................................(millions of dollars)..............
United Parcel Service 291 11 302
Union Pacific 308 180 488
Burlington NoSantaFe 341 109 450
Norfolk Southern 126 170 296
Delta Air Lines 858 29 887
CSX 133 44 177
FedEx 357 121 478
United Continental 1,837 273 2,110
Southwest Airlines 660 (165) 495
Alaska Air 199 (73) 126
Kansas City Southern 25 30 55
US Airways 280 (144) 136
AMR 642 (305) 337
Total all 13 6,057 316 6,373
