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Third Quarter 2005 Airline Financial Data: Regional Passenger Airlines and Low-Cost Airlines Report Domestic Profit; Network Carriers Report Smaller Loss

Third Quarter 2005 Airline Financial Data: Regional Passenger Airlines and Low-Cost Airlines Report Domestic Profit; Network Carriers Report Smaller Loss

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BTS 58-05
Dave Smallen
202-366-5568

Monday, December 19, 2005 - The seven largest regional airlines and the seven largest low-cost carriers each reported a domestic operating profit margin ― an industry measure of profitability ― while the network carriers reported a smaller loss during the third quarter of 2005 than a year earlier, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation reported today in a release of preliminary data.

BTS, a part of the Research and Innovative Technology Administration, reported that the group of regional carriers reported a domestic operating profit margin of 7.4 percent for the third quarter and the low-cost group generated a 2.1 percent profit margin, while a 2.2 percent loss margin was reported by the seven network carriers (Table 1). Domestic operating margin measures profit or loss as a percentage of the airline's total domestic operating revenue.

The domestic passenger airline industry operating margin, represented by the 21 selected carriers, declined from a 0.4 percent profit margin in the second quarter of 2005 to a 2.0 percent loss margin in the third quarter.  Quarter-to-quarter changes may be affected by seasonal factors.

Both the low-cost and regional carrier groups reported declines in profit margin from the third quarter of 2004 while the network carriers reported a smaller loss margin. From the third quarter of 2004 to the third quarter of 2005, the profit margin for the regional group fell 3.6 percentage points while the low-cost group's dropped 1.5 percentage points. The operating loss margin for the network group improved 5.4 percentage points for a total operating loss of $711.4 million in the third quarter (Table 2).

The largest percentage operating loss margins were reported by low-cost carrier ATA Airlines- the airline filed for Chapter 11 bankruptcy protection in 2004 - regional carrier Pinnacle Airlines, which was impacted by the September 14 bankruptcy filing of its partner Northwest Airlines (Table 4) and low-cost carrier Spirit Airlines (Table 3). The top operating profit margins were reported by low-cost carrier Southwest Airlines (Table 3) and regional airlines Mesa Airlines and American Eagle Airlines (Table 4) .

Network carriers operate a significant portion of their flights using at least one hub where connections are made for flights on a spoke system. Low-cost carriers are those that the industry generally recognizes as operating under a low-cost business model. Regional carriers provide service from small cities, using primarily regional jets to support the network carriers' hub and spoke systems. The selected groups consist of the seven carriers in each group with the highest reported revenue in the most recent 12-month period.

The regional carriers had the highest unit revenues with 14.5 cents per available seat mile (Table 5). These higher unit revenues generally reflect the shorter flights and smaller aircraft flown by these carriers. Regional carriers average flights of 300 to 450 miles, compared to the 1,000-mile average stage length for the network carriers. Domestic unit revenue measures revenues against capacity by dividing domestic operating revenues by domestic available seat miles.

The highest unit revenues were reported by regional carriers American Eagle, SkyWest Airlines (Table 8) and network airline Northwest (Table 6). The lowest unit revenues were reported by low-cost carriers JetBlue Airways, ATA and Spirit (Table 7).

The network carriers reported the highest domestic unit costs - 14.0 cents per available seat mile, exceeding the regional airlines' 13.4 cents per available seat mile (Table 9). The low-cost carriers reported the lowest unit costs - 9.1 cents per available seat mile. Domestic unit cost measures expenses against capacity by dividing domestic operating expenses by domestic available seat miles.

The carriers with the highest unit costs were network airlines Northwest and US Airways (Table 10) and regional carrier Pinnacle (Table 12). The carriers with the lowest unit costs were low-cost carriers JetBlue, Southwest and AirTran Airways (Table 11).

The regional carriers reported the highest domestic passenger revenue yields ― 19.6 cents per revenue passenger mile (Table 13). Domestic passenger revenue yield measures passenger revenues against total travel by dividing domestic passenger revenues by domestic revenue passenger miles.

The top passenger revenue yields were reported by regional carriers American Eagle, Comair and SkyWest (Table 16). The lowest passenger revenue yields were reported by low-cost carriers JetBlue, ATA, and Spirit (Table 15). Alaska Airlines reported the highest revenue yield of any network carrier (Table 14). Delta Air Lines' and United Airlines' passenger revenue yields have lagged behind the other network carriers for the past four quarters. These airlines have developed internal low-fare airlines within the operational structure of the mainline carrier marketed specifically to operate in leisure markets - Delta created "Song" and United started "Ted."

Additional airline financial data is posted on the BTS website at TranStats, the Intermodal Transportation Database, http://transtats.bts.gov. Click on "aviation," then on "Air Carrier Financial Reports (Form 41 Financial Data)," then click on "Schedule P-12."

Data are compiled from quarterly financial and monthly traffic reports filed with BTS by commercial air carriers. Financial and traffic data are preliminary and include data received by BTS as of Dec. 13. Data are subject to revision.

Data from the third quarter of 2005 and previous quarters are posted on the BTS website at http://transtats.bts.gov. BTS will release fourth quarter financial data and revised data from the third quarter on May 15, 2006.

Table 1: Quarterly Domestic Operating profit/loss margin (in percent)

Passenger Airlines by Group
Ranked by 3rd Quarter 2005 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

3Q 2005 Rank   3rd Quarter 2004 (%) 4th Quarter 2004 (%) 1st Quarter 2005 (%) 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 3rd Quarter Operating Profit/Loss $(Millions)
1 Regional Carriers 11.0 10.4 8.5 10.7 7.4 177.2
2 Low-Cost Carriers 3.6 -11.5 -4.3 5.3 2.1 89.0
3 Network Carriers -7.6 -15.8 -9.9 -2.2 -2.2 -711.4
  21-Carrier Total -3.8 -12.2 -6.9 0.4 -2.0 -445.2

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2

Table 2: Quarterly Domestic Operating profit/loss margin (in percent)

Network Carriers
Ranked by 3rd Quarter 2005 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

3Q 2005 Rank Network Carriers 3rd Quarter 2004 (%) 4th Quarter 2004 (%) 1st Quarter 2005 (%) 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 3rd Quarter Operating Profit/Loss $(Millions)
1 Alaska 6.9 -11.7 -16.0 -0.5 11.7 76.5
2 United -7.7 -22.7 -6.9 -0.9 1.9 59.6
3 American -8.2 -14.0 -4.7 0.8 -5.4 -184.5
4 Delta -13.0 -17.7 -13.6 -4.1 -6.0 -194.2
5 US Airways -14.3 -10.1 -13.9 -1.0 -7.5 -113.3
6 Northwest 1.6 -11.7 -10.4 -4.8 -8.6 -189.5
7 Continental -7.0 -15.4 -12.0 -5.2 -8.8 -165.2
  Seven-Carrier Total -7.6 -15.8 -9.9 -2.2 -2.2 -711.4

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2

Table 3: Quarterly Domestic Operating profit/loss margin (in percent)

Low-Cost Carriers
Ranked by 3rd Quarter 2005 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

3Q 2005 Rank Low-Cost Carriers 3rd Quarter 2004 (%) 4th Quarter 2004 (%) 1st Quarter 2005 (%) 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 3rd Quarter Operating Profit/Loss $(Millions)
1 Southwest 11.4 7.2 6.4 11.5 13.7 273.0
2 Frontier -0.3 -7.3 -1.3 -0.2 5.2 13.2
3 JetBlue 7.1 3.7 6.9 9.3 3.2 14.4
4 AirTran -4.9 1.3 -3.2 5.3 0.3 1.2
5 America West -4.7 -6.9 6.6 3.4 -6.2 -54.1
6 Spirit -13.3 -31.6 -3.8 -10.7 -14.2 -14.9
7 ATA -12.5 -187.0 -185.0 -38.9 -81.4 -143.8
  Seven-Carrier Total 3.6 -11.5 -4.3 5.3 2.1 89.0

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2

Table 4: Quarterly Domestic Operating profit/loss margin (in percent)

Regional Carriers
Ranked by 3rd Quarter 2005 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

3Q 2005 Rank Regional Carriers 3rd Quarter 2004 (%) 4th Quarter 2004 (%) 1st Quarter 2005 (%) 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 3rd Quarter Operating Profit/Loss $(Millions)
1 Mesa 7.9 11.9 13.2 13.9 13.0 37.8
2 American Eagle 14.1 14.9 13.5 14.3 12.3 56.9
3 SkyWest 12.3 11.3 10.1 11.6 11.1 46.1
4 Atlantic Southeast 9.0 9.4 -0.2 10.2 9.6 29.3
5 ExpressJet 12.4 13.3 9.1 9.2 8.5 30.1
6 Comair 8.1 -0.2 1.6 4.4 2.6 9.2
7 Pinnacle 11.0 9.7 10.3 10.7 -14.6 -32.4
  Seven-Carrier Total 11.0 10.4 8.5 10.7 7.4 177.2

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2

Table 5:Airline Domestic Unit Revenue (Cents Per Mile)

Passenger Airlines by Group
Ranked by 3rd Quarter 2005 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

3Q 2005 Rank   3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Revenue $(Millions)
1 Regional Carriers 14.2 14.6 14.5 14.3 14.5 2,408.6
2 Network Carriers 11.7 11.8 12.0 13.3 13.4 15,980.4
3 Low-Cost Carriers 8.0 7.9 8.4 8.7 9.3 4,216.4
  21-Carrier Total 11.0 11.0 11.3 12.3 12.5 22,605.4

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2. T100; T2 Data

Table 6: Airline Domestic Unit Revenue (Cents Per Mile)

Network Carriers
Ranked by 3rd Quarter 2005 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

3Q 2005 Rank Network Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Revenue $(Millions)
1 Northwest 14.1 13.7 13.7 15.0 15.4 2,202.1
2 US Airways 14.1 13.7 13.0 15.2 15.2 1,511.0
3 Continental 10.3 13.2 14.1 14.9 14.6 1,880.1
4 United 11.4 11.3 11.4 13.7 14.1 3,064.8
5 Delta 12.3 11.9 12.0 13.0 12.9 3,265.8
6 Alaska 10.8 9.9 9.9 11.3 12.1 652.3
7 American 10.1 10.2 10.8 11.6 11.5 3,404.3
  Seven-Carrier Total 11.7 11.8 12.0 13.3 13.4 15,980.4

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2. T100; T2 Data

Table 7: Airline Domestic Unit Revenue (Cents Per Mile)

Low-Cost Carriers
Ranked by 3rd Quarter 2005 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

3Q 2005 Rank Low-Cost Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Revenue $(Millions)
1 America West 8.1 8.0 10.4 11.4 11.5 868.3
2 Frontier 9.5 10.2 11.1 10.7 10.9 251.4
3 AirTran 8.2 8.4 8.5 9.6 9.6 373.6
4 Southwest 8.6 8.2 8.2 8.0 9.1 1,988.6
5 Spirit 7.6 7.2 8.5 9.2 8.5 104.9
6 ATA 6.5 5.9 5.8 6.7 7.6 176.7
7 JetBlue 6.6 6.7 7.2 7.4 7.2 452.9
  Seven-Carrier Total 8.0 7.9 8.4 8.7 9.3 4,216.4

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2. T100; T2 Data

Table 8: Airline Domestic Unit Revenue (Cents Per Mile)

Regional Carriers
Ranked by 3rd Quarter 2005 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

3Q 2005 Rank Regional Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Revenue $(Millions)
1 American Eagle 16.5 17.2 17.2 16.6 16.7 463.5
2 SkyWest 15.1 15.5 15.3 15.0 15.4 417.7
3 Comair 13.3 13.3 14.1 14.8 15.0 354.9
4 Atlantic Southeast 13.6 14.7 13.6 13.7 14.7 304.8
5 Pinnacle 14.5 14.5 15.1 14.3 14.1 220.9
6 ExpressJet 14.5 14.4 13.9 13.0 12.8 355.5
7 Mesa 11.7 12.4 12.2 12.2 12.3 291.1
  Seven-Carrier Total 14.2 14.6 14.5 14.3 14.5 2,408.6

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2. T100; T2 Data

Table 9:Airline Domestic Unit Costs (Cents per Mile)

Passenger Airlines by Group
Ranked by 3rd Quarter 2005 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

3Q 2005 Rank   3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Expenses $(Millions)
1 Network Carriers 12.6 13.7 13.2 13.6 14.0 16,691.7
2 Regional Carriers 12.6 13.1 13.3 12.7 13.4 2,231.4
3 Low Cost Carriers 7.8 8.8 8.8 8.3 9.1 4,127.4
  21-Carrier Total 11.4 12.4 12.1 12.2 12.7 23,050.5

Source: Bureau of Transportation Statistics; Form 41, Schedule P1.2. T100; T2 Data

Table 10:Airline Domestic Unit Costs (Cents per Mile)

Network Carriers
Ranked by 3rd Quarter 2005 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

3Q 2005 Rank Network Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Expenses $(Millions)
1 Northwest 13.9 15.4 15.1 15.7 16.7 2,391.5
2 US Airways 16.1 15.0 14.8 15.3 16.3 1,624.4
3 Continental 11.0 15.3 15.8 15.7 15.9 2,045.3
4 United 12.3 13.9 12.2 13.8 13.8 3,005.2
5 Delta 13.9 14.1 13.7 13.5 13.7 3,460.0
6 American 10.9 11.6 11.3 11.5 12.1 3,588.8
7 Alaska 10.1 11.1 11.4 11.3 10.6 575.8
  Seven-Carrier Total 12.6 13.7 13.2 13.6 14.0 16,691.7

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data

Table 11:Airline Domestic Unit Costs (Cents per Mile)

Low-Cost Carriers
Ranked by 3rd Quarter 2005 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

3Q 2005 Rank Low-Cost Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Expenses $(Millions)
1 ATA 7.3 16.9 16.4 9.3 13.8 320.5
2 America West 8.5 8.6 9.7 11.4 12.2 922.4
3 Frontier 9.5 10.9 11.3 10.7 10.3 238.2
4 Spirit 8.6 9.5 8.8 10.2 9.7 119.8
5 AirTran 8.6 8.3 8.7 9.0 9.6 372.4
6 Southwest 7.6 7.6 7.7 7.1 7.8 1,715.6
7 JetBlue 6.1 6.5 6.7 6.7 7.0 438.5
  Seven-Carrier Total 7.8 8.8 8.8 8.3 9.1 4,127.4

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data.

Table 12:Airline Domestic Unit Costs (Cents per Mile)

Regionals
Ranked by 3rd Quarter 2005 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

3Q 2005 Rank Regional Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Operating Expenses $(Millions)
1 Pinnacle 12.9 13.1 13.5 12.8 16.2 253.3
2 Comair 12.2 13.3 13.8 14.1 14.7 345.7
3 American Eagle 14.2 14.6 14.8 14.2 14.6 406.6
4 SkyWest 13.2 13.8 13.7 13.3 13.7 371.6
5 Atlantic Southeast 12.3 13.3 13.7 12.3 13.3 275.5
6 ExpressJet 12.7 12.5 12.7 11.8 11.7 325.4
7 Mesa 10.8 10.9 10.6 10.5 10.7 253.3
  Seven-Carrier Total 12.6 13.1 13.3 12.7 13.4 2,231.4

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data.

Table 13: Domestic Passenger Revenue Yield (Cents per Mile)

Passenger Airlines by Group
Ranked by 3rd Quarter 2005 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

3Q 2005 Rank   3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Passenger Revenue $(Millions)
1 Regional Carriers 19.5 20.7 21.1 19.4 19.6 2,396.4
2 Network Carriers 11.1 11.3 11.6 11.9 11.7 11,334.5
3 Low-Cost Carriers 9.7 10.2 10.6 10.8 10.6 3,759.2
  21-Carrier Total 11.4 11.8 12.1 12.3 12.1 17,490.1

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data

Table 14: Domestic Passenger Revenue Yield (Cents per Mile)

Network Carriers
Ranked by 3rd Quarter 2005 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

3Q 2005 Rank Network Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Passenger Revenue $(Millions)
1 Alaska 12.3 11.9 11.9 12.8 13.4 573.9
2 US Airways 12.4 12.9 12.4 13.2 13.0 980.3
3 Northwest 12.9 12.8 12.8 13.3 12.9 1,519.0
4 Continental 11.2 11.4 12.1 12.2 11.6 1,246.5
5 American 10.7 11.1 11.6 11.7 11.5 2,794.5
6 United 10.1 10.5 10.8 11.1 11.3 2,062.4
7 Delta 10.7 11.0 11.1 11.2 10.6 2,157.8
  Seven-Carrier Total 11.1 11.4 11.6 11.9 11.7 11,334.5

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data.

Table 15: Domestic Passenger Revenue Yield (Cents per Mile)

Low-Cost Carriers
Ranked by 3rd Quarter 2005 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

3Q 2005 Rank Low-Cost Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Passenger Revenue $(Millions)
1 AirTran 11.3 11.7 11.8 12.2 12.1 357.4
2 Southwest 11.1 11.7 11.7 11.7 11.4 1,865.1
3 Frontier 10.7 11.3 12.2 10.9 11.3 213.4
4 America West 8.6 9.2 10.0 10.2 10.2 624.6
5 Spirit 8.8 9.4 10.5 11.1 9.8 101.0
6 ATA 7.7 7.6 8.4 10.0 9.2 166.3
7 JetBlue 7.6 7.7 8.1 8.1 8.0 431.5
  Seven-Carrier Total 9.7 10.2 10.6 10.8 10.6 3,759.2

Source: Bureau of Transportation Statistics; Form 41; Schedule P1.2. T100; T2 Data

Table 16: Domestic Passenger Revenue Yield (Cents per Mile)

Regionals
Ranked by 3rd Quarter 2005 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

3Q 2005 Rank Regional Carriers 3rd Quarter 2004 4th Quarter 2004 1st Quarter 2005 2nd Quarter 2005 3rd Quarter 2005 3rd Quarter Passenger Revenue $(Millions)
1 American Eagle 23.4 25.0 25.9 22.6 23.0 461.5
2 Comair 19.1 19.7 21.9 20.7 21.7 354.9
3 SkyWest 19.5 21.1 20.6 19.7 19.8 410.6
4 Atlantic Southeast 19.2 20.6 19.4 19.0 19.7 302.8
5 Pinnacle 20.0 21.7 23.6 19.4 18.8 218.8
6 Mesa 15.6 17.4 17.9 16.8 17.9 292.4
7 ExpressJet 19.4 19.7 19.4 17.2 16.6 355.4
  Seven-Carrier Total 19.5 20.7 21.1 19.4 19.6 2,396.4

Source: Form 41; Schedule P1.2. T100; T2 Data.