Transport Operators · Airlines
RASM and CASM: Airline Unit Economics
TRASM, PRASM, RASM and CASM-ex defined from carrier filings; the FY2025 US unit-margin comparison; matching revenue to cost; why European metrics differ.
Selborne Research · Airlines coverage: 7 guides, 6 company profiles, a primer and Excel model
Educational analysis. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
On this page
Unit Revenue Minus Unit Cost Is the Whole Game
An airline sells seat-miles. Subtract cost per seat-mile, excluding fuel, from revenue per seat-mile and what is left pays for fuel, then interest, tax and shareholders. The fleet is already paid for inside that spread: ex-fuel cost still includes depreciation and aircraft rent.
The trap is mixing definitions. A spread built from a mismatched revenue and cost pair can count revenue without its cost, and Delta’s refinery, below, is the clearest case.
The Alphabet: One Metric Per Column
Each metric divides something by capacity. Carriers differ over what goes on top.
| Term | Numerator | Denominator | Who files it |
|---|---|---|---|
| ASM (available seat mile) | One seat flown one mile, full or empty | Capacity measure | All US carriers (Southwest footnote (c)) |
| RASM / TRASM | Total operating revenue | ASM | Delta, United (TRASM); American, Southwest (RASM) |
| PRASM | Passenger revenue only | ASM | Delta 17.37¢, United 16.18¢, American 16.58¢ (FY2025) |
| CASM | Total operating expenses | ASM | All US carriers |
| CASM-ex / CASM-Ex | Opex ex fuel (and other exclusions) | ASM | Each filer defines exclusions differently |
| PRASK | Passenger revenue | ASK (seat-km) | International Airlines Group (IAG): 8.24 €c/ASK (FY2025) |
| Yield/RPM | Total revenue (fares plus ancillaries) | Revenue passenger miles (one paying passenger flown one mile) | Ryanair: €0.0889/RPM (FY to 31 Mar 2025) |
Delta’s FY2025 GAAP TRASM was 21.26¢ against PRASM of 17.37¢; the gap is cargo, loyalty, refinery and other non-passenger revenue. Sales from Delta’s own oil refinery to third parties were 1.70¢ of it. Delta strips them out to give adjusted TRASM of 19.56¢, and strips the matching cost out of CASM-Ex. American files RASM, so peer tables need a label column.
European filers use kilometres and euro cents. IAG’s PRASK converts to roughly 13.26 €c/ASM (8.24 €c/ASK × 1.609344). Ryanair’s total revenue works out at roughly €0.0840/ASM. Neither fits the US table without currency and definition work.
CASM-ex Is the Comparable Cost Line
Fuel swings too much for headline cost to compare carriers, so analysts strip it out. What else comes out differs by carrier.
| Carrier | CASM-ex excludes | Headline CASM (FY2025) |
|---|---|---|
| Delta | Fuel, third-party refinery sales, profit sharing and (from March 2026) certain maintenance, repair and overhaul (MRO) items | 19.31¢ |
| United | Fuel, profit sharing, special charges, third-party business expenses | 16.46¢ |
| American | Fuel, net special items | 17.76¢ |
| Southwest | Fuel and oil only; special items and profit sharing stay in | 15.35¢ |
None strips out depreciation or aircraft rent, so every ex-fuel figure on this page still carries the cost of owning and leasing the fleet.
FY2025 Unit Margin, US Carriers (Like-for-Like)
A spread means something only when revenue and cost share a basis. Here that is TRASM (or RASM where TRASM is not filed) minus filed CASM-ex; PRASM never goes in. Delta’s CASM-Ex removes the cost of third-party refinery sales, so it sits against adjusted TRASM, which removes the revenue too. GAAP TRASM would give 7.4¢, counting refinery revenue whose cost has gone.
| Carrier | Unit revenue | CASM-ex | Spread (computed) |
|---|---|---|---|
| Delta | TRASM, adjusted 19.56¢ | CASM-Ex 13.86¢ | ~5.7¢ |
| United | TRASM 17.88¢ | CASM-ex 12.64¢ | ~5.2¢ |
| American | RASM 18.25¢ | CASM ex fuel 14.12¢ | ~4.1¢ |
| Southwest | RASM 15.59¢ | CASM ex-fuel 12.44¢ | ~3.2¢ |
Ryanair and IAG report in other units, so they stay out.
Worked Mini-Example: Spread at a Mid-Network Carrier
Illustrative inputs: 200bn ASMs a year, TRASM 18.0¢, CASM-ex 13.0¢.
| Line | Calculation | Result |
|---|---|---|
| Total revenue | 200bn × 18.0¢ | $36.0B |
| Ex-fuel opex | 200bn × 13.0¢ | $26.0B |
| Unit spread (ex fuel) | 18.0¢ − 13.0¢ | 5.0¢/ASM |
| Spread dollars | 200bn × 5.0¢ | $10.0B |
By convention we screen about 3–8¢/ASM as normal for US network and low-cost carriers. Below about 3¢ little is left for fuel and financing; above about 8¢ points to a premium revenue mix or unusually low costs. This carrier’s 5.0¢ sits mid-band.
Fuel then takes most of it. At a mid-cycle $2.85/gal and 15 gal per 1,000 ASMs, fuel costs about 4.3¢/ASM (~$8.6B). About 0.7¢/ASM, or ~$1.45B, is left as operating income, because depreciation and aircraft rent sat inside the 13.0¢. The fuel and hedging guide shows the swing.
What to Check Before You Compare
- Revenue basis: TRASM, RASM, PRASM, PRASK or yield per RPM.
- The CASM-ex footnote. Refinery sales, profit sharing and special items differ by filer.
- Currency and distance: euro cents per ASK against US cents per ASM.
- Load factor, the share of seats filled. A wide spread earned while load factor collapses may not repeat; see load factor.
Delta has the widest FY2025 spread once refinery sales are matched out, and United the largest ASM base, up 6.1% on the year. Ryanair shows the ultra-low-cost model in European units.
EBITDAR builds from a thin unit margin on seat miles, the leases are capitalised into net debt, and the value moves on what a small load-factor drop costs.
- 15 sections, unit economics to lease-adjusted EV/EBITDAR and the downturn
- 41 pages
- a premium network carrier and a low-cost carrier
- 2 worked examples
- US and European carriers on filed unit revenue, unit cost and leverage
- 6-company screen
The Excel model is the primer's airline build live across 11 sheets: EBITDAR from seat miles and unit margin, leases capitalised into adjusted net debt, a through-cycle EV/EBITDAR valuation for a network carrier and a low-cost carrier, a load-factor downturn, a lease-adjusted leverage screen and a sensitivity grid. Change the unit revenue, fuel or leases and the value moves.
See what's in the Airlines Sector Primer →£25 PDF · £59 with the Excel model · £159 for all three Transport Operators industries
Frequently Asked Questions
- What is RASM in airline accounting?
- RASM (revenue per available seat mile) is total operating revenue divided by available seat miles (ASM). US carriers label it "operating unit revenues" in SEC operating-statistics tables. TRASM is the same ratio on a total-revenue basis; PRASM restricts the numerator to passenger revenue only. European filers often report PRASK (passenger revenue per available seat kilometre) instead.
- What is CASM-ex and why do analysts use it?
- CASM-ex (or CASM-Ex) is operating expense per ASM excluding fuel and other volatile or non-comparable items. Delta's CASM-Ex also excludes third-party refinery sales and profit sharing. It still includes depreciation and aircraft rent. Fuel swings quarter to quarter; ex-fuel CASM is the cost-discipline line you can compare across peers and years once you reconcile each filer's footnotes.
- What is a normal unit margin for US airlines?
- On FY2025 filed data, unit revenue minus CASM-ex ran from ~3.2¢/ASM at Southwest to ~5.7¢/ASM at Delta (Delta on adjusted TRASM, which matches its CASM-Ex). Separately, a common screening convention treats ~3–8¢/ASM as normal for US network and low-cost carriers. Below ~3¢ little is left for fuel and financing; above ~8¢ points to a premium revenue mix or exceptional cost control.
- Can you compare Delta TRASM to Ryanair CASM directly?
- No. Ryanair files CASM in EUR per ASM and yield per revenue passenger mile, not US-style TRASM/PRASM. IAG reports PRASK and CASK in €c per ASK. Cross-border work requires matching revenue and cost definitions, converting currency at stated FX, and converting ASK to ASM with the 1.609344 km factor where needed.
Read next
Airline Fuel Costs and Hedging
A mid-cycle jet fuel price vs EIA spot; Delta Monroe refinery as operational hedge; Southwest hedge exit; European rolling books.
Load Factor: Reading Airline Density
Load factor as RPM ÷ ASM vs IATA's RPK ÷ ASK; FY2025 IATA regional benchmarks; why a full plane is not a profitable one; capacity growth vs density.
EBITDA vs EBITDAR: Why Airlines Add Back Rent
EBITDAR adds aircraft rent back to EBITDA so owned and leased fleets compare. Which debt pairs with each, and how IFRS 16 and ASC 842 change the figures.
Airline CASM by Carrier: Unit Cost Compared
FY2025 CASM and CASM ex-fuel for six US and European airlines, each on its own definition, unit and year end, and what makes unit cost differ.
See it applied
These company profiles apply the concepts from this guide to real public companies.