America's Best Airline?

I received an avalanche of email on my Take about US Airways Group's (OTC BB: UAIRQ) Christmas woes (due to an alleged sick-out by some baggage handlers in Philadelphia). From the long, sincere analyses by long-term airline industry employees hurt by years of wage concessions to the red-hot unprintable flames, there was one thing that most emails lacked, in my opinion -- plain facts about today's realities.

Does Motley Fool Stock Advisor recommendation JetBlue (Nasdaq: JBLU) have the highest load factor in the U.S.? In November, it was No. 2 -- at 83.8% (and for 2004, it was No. 2 at 83.3%). No. 1 all year, while increasing its load factor every month of 2004 to a high of 87.4% in November, was bankrupt Hawaiian Airlines, a Hawaiian Holdings (AMEX: HA) company, at 85.9%.

Northwest (Nasdaq: NWAC) came in at No. 3 at 80.4%, and bankrupt UAL's (OTC BB: UALAQ) United finished at 79.4%. If filling airline seats was the only factor, it would appear that bankruptcy trustees are the best airline managers (with two out of the four best) -- and they make a fraction of what airline executives demand.

As a traveler, there are other factors more important than load factors. Who's No. 1 for on-time arrivals? For the first 10 months of 2004, it was Hawaiian Airlines. How about fewest complaints about baggage handling? It's Hawaiian Airlines again.

Is Hawaiian high on cost cutting and low on innovation? In September, the airline announced traveler nirvana -- the ability to check in luggage from your office, home, or hotel. It's a great idea. Which would you rather have -- another hour enjoying Hawaii or getting to the airport early to stand in line so you and your luggage arrive on the same flight?

One more plain (plane?) fact: Great statistics do not produce the best airline. While Hawaiian Airlines was the third-most profitable airline in 2003, it lost money from September through November 2004, after 17 straight months of operating gains. The one-two punch to November's profitability was a year-over-year 72% increase in fuel costs and a 23% increase in employee costs.

For all those writing about, "Oh, if only the load factor was higher" or the litany of other airline "Oh, ifs... " consider this: It really is hard to make money in this business. Tip your hat to perennial moneymaker Southwest Airlines (NYSE: LUV). It has a time-tested formula that lets others compete for statistics while it focuses on what's important -- profits.

For airlines, 2004 was a tough year. Just last week, Aloha Airlines (Hawaii's other major airline) entered bankruptcy, joining ATA Holdings (OTC BB: ATAHQ), Hawaiian, USAir, and United under court protection. It's getting crowded in court -- and then you have Virgin planning to launch a San Francisco-based low-cost airline in 2005. Go figure.

For related Fool analysis, see:

• Red-Hot Airline Stock
• Airline Eliminates Check-In Hassle
• Have Ailing Airlines Found a Cure?

Are you interested in strong companies with great growth opportunities? Try a subscription to the Motley Fool Stock Advisor newsletter. There's a six-month money-back guarantee.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned but was a consultant to Delta Air Lines.