cost per available seat-mile

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Dead Companies Walking by Scott Fearon

Alan Greenspan, bank run, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, book value, business cycle, Carl Icahn, corporate raider, cost per available seat-mile, creative destruction, crony capitalism, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, Golden Gate Park, hiring and firing, housing crisis, index fund, it's over 9,000, Jeff Bezos, John Bogle, Joseph Schumpeter, Larry Ellison, late fees, legacy carrier, McMansion, moral hazard, multilevel marketing, new economy, pets.com, Ponzi scheme, Ronald Reagan, short selling, short squeeze, Silicon Valley, Snapchat, South of Market, San Francisco, Steve Jobs, survivorship bias, Upton Sinclair, Vanguard fund, young professional

Continental was still in business as Texas Air’s prime operating subsidiary, but it was only serving a fraction of the routes it had once served. Because of these troubles, shares of Texas Air were very cheap, down around $5. And yet, when I crunched the numbers and plotted out the company’s earnings models, I found something intriguing: of all the airlines in business, Texas Air had the lowest “cost per available seat-mile,” meaning it could charge less for tickets and still make a healthy profit. I checked and rechecked my calculations to make sure they were correct. When I was satisfied that I hadn’t made a stupid error, I started to go into my boss Geoff Raymond’s office to show him what I had found.