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Second Quarter 2006 Airline Financial Data: Passenger Airlines Report Largest Domestic Profit Margin Since 2000

Second Quarter 2006 Airline Financial Data: Passenger Airlines Report Largest Domestic Profit Margin Since 2000

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BTS 43-06
Dave Smallen
202-366-5568

Monday, September 18, 2006 - A group of 21 selected passenger airlines reported a domestic operating profit margin of 7.9 percent in the second quarter, the largest profit margin for this group since the second quarter of 2000, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation reported today in a release of preliminary data. The 21-carrier group consists of the seven largest network, low-cost and regional carriers based on operating revenue.

BTS, a part of the Research and Innovative Technology Administration, reported that the domestic profit margin for the group was the first since the second quarter of 2005. The group of low-cost carriers reported a domestic operating profit margin of 10.6 percent, the regional carrier group reported a 7.9 percent margin and the network carriers reported a 7.2 percent profit margin (Table 1). Domestic operating margin measures profit or loss as a percentage of the airline's total domestic operating revenue.

The network group's profit margin of 7.2 percent in the second quarter was a 9.4 percentage point improvement from a -2.2 percent loss margin in the second quarter of 2005 (Table 1). The seven carriers reported a combined domestic operating profit of $1.3 billion in the second quarter for the group's first profit margin since at least the beginning of 2003. In the second quarter of 2005, the seven network carriers' domestic operating loss was $0.4 billion.

The low-cost group's profit margin of 10.6 percent in the second quarter was a 5.3 percentage point improvement from a 5.3 percent profit margin in the second quarter of 2005. The seven carriers reported a combined $541 million domestic operating profit in the second quarter (Table 1).

The regional group's profit margin of 7.9 percent profit margin in the second quarter was a 2.8 percentage point loss from the 10.7 percent profit margin in the second quarter of 2005. The seven regional carriers reported a $193 million operating profit in the second quarter (Table 1).

The only airlines in the 21-carrier group to report operating loss margins were low-cost carriers Spirit Airlines and ATA Airlines (Table 3) and network carrier Continental Airlines (Table 2). The top operating profit margins were reported by low-cost Southwest Airlines (Table 3), network carrier Northwest Airlines (Table 2), and regional carrier Atlantic Southeast 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 network carriers reported the highest unit revenues in the second quarter at 15.8 cents per available seat-mile (ASM). Regional carriers' unit revenues were 15.3 cents per ASM followed by the low-cost carrier group at 10.8 cents per ASM. All three groups exhibited increases in unit revenues over the year earlier period with the network airlines registering the sharpest gains at 2.5 cents (Table 5).

The highest unit revenues were reported by network carriers US Airways, Northwest and Continental (Table 6). The lowest unit revenues were reported by low-cost carriers ATA, JetBlue Airways and Southwest (Table 7).

The network carriers reported the highest unit costs in the second quarter at 14.6 cents per ASM. Regional carriers' unit costs were 14.1 cents per ASM followed by the low-cost carriers at 9.7 cents per ASM. The regional and low-cost carrier groups both had a year over year increase in unit costs of 1.4 cents per ASM compared to 1.0 cent higher for the network group (Table 9).

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

The regional airlines reported the highest domestic passenger average yield at 18.9 cents per revenue passenger-mile (RPM). The network carriers at 13.1 cents per RPM and the low-cost carriers at 12.1 cents per RPM both reported yield gains over the second quarter of 2005 (Table 13). Domestic passenger revenue yield measures passenger revenues against total travel by dividing domestic passenger revenues by domestic RPMs.

The top passenger revenue yields were reported by regional carriers American Eagle Airlines, Comair and Atlantic Southeast (Table 16). The lowest passenger revenue yields were reported by low-cost carriers ATA, JetBlue and Frontier Airlines (Table 15). Northwest reported the highest revenue yield of any network carrier (Table 14).

Additional airline financial data are 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 Sept. 12. Data are subject to revision.

Data from the second quarter of 2006 and previous quarters are posted on the BTS website at http://transtats.bts.gov. BTS will release third quarter 2006 financial data and revised data from the second quarter on Dec. 18.

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

Passenger Airlines by Group
Ranked by 2nd Quarter 2006 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

2Q 2006 Rank   2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 2nd Quarter Operating Profit/Loss $(Millions)
1 Low-Cost Carriers 5.3 2.1 1.2 2.2 10.6 541
2 Regional Carriers 10.7 7.4 8.7 9.1 7.9 193
3 Network Carriers -2.2 -4.5 -8.4 -4.2 7.2 1,262
  21-Carrier Total 0.4 -2.0 -4.7 -1.6 7.9 1,996

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

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

Network Carriers
Ranked by 2nd Quarter 2006 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

2Q 2006 Rank Network Carriers 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 2nd Quarter Operating Profit/Loss $(Millions)
1 Northwest -4.8 -8.6 -7.0 3.2 13.7 314
2 Delta -4.1 -6.0 -10.8 -9.4 11.1 393
3 US Airways -1.0 -7.5 -4.6 -1.7 8.3 131
4 United -0.9 1.9 -5.1 -3.5 5.8 200
5 American 0.8 -5.4 -9.9 -0.2 5.5 207
6 Alaska -0.5 11.7 -3.7 -27.8 5.2 34
7 Continental -5.2 -8.8 -12.6 -7.4 -0.8 -17
  Seven-Carrier Total -2.2 -4.5 -8.4 -4.2 7.2 1,262

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 2nd Quarter 2006 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue

Excel | CSV

2Q 2006 Rank Low-Cost Carriers 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 2nd Quarter Operating Profit/Loss $(Millions)
1 Southwest 11.5 13.7 8.2 4.9 16.4 401
2 AirTran 5.3 0.3 0.9 -1.1 10.3 54
3 JetBlue 9.3 3.2 -4.0 -5.1 7.7 47
4 America West 3.4 -6.2 -16.5 9.0 5.4 53
5 Frontier -0.2 5.2 -5.5 -3.9 4.2 12
6 Spirit -10.7 -14.2 -22.3 -7.3 -3.2 -4
7 ATA -38.9 -81.4 53.8 -38.7 -21.1 -23
  Seven-Carrier Total 5.3 2.1 1.2 2.2 10.6 541

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

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

Regional Carriers
Ranked by 2nd Quarter 2006 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

2Q 2006 Rank Regional Carriers 2nd Quarter 2005 (%) 3rd Quarter 2005 (%) 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 2nd Quarter Operating Profit/Loss $(Millions)
1 Atlantic Southeast 10.2 9.6 13.1 13.6 13.2 43
2 Sky West 11.6 11.1 10.3 9.4 10.0 47
3 Pinnacle 10.7 -14.6 7.7 10.4 9.5 20
4 American Eagle 14.3 12.3 10.3 11.0 8.1 39
5 Express Jet 9.2 8.5 9.0 8.1 7.3 28
6 Mesa 13.9 13.0 10.3 8.9 4.1 12
7 Comair 4.4 2.6 -0.9 1.5 2.1 6
  Seven-Carrier Total 10.7 7.4 8.7 9.1 7.9 193

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 2nd Quarter 2006 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

2Q 2006 Rank   2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Revenue $(Millions)
1 Network Carriers 13.3 13.4 13.9 14.4 15.8 17,580
2 Regional Carriers 14.3 14.5 15.0 15.4 15.3 2,443
3 Low-Cost Carriers 8.7 9.3 9.3 9.5 10.8 5,087
  21-Carrier Total 12.3 12.5 12.8 13.2 14.4 25,110

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 2nd Quarter 2006 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

2Q 2006 Rank Network Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Revenue $(Millions)
1 US Airways 15.2 15.2 17.0 18.5 18.5 $1,584
2 Northwest 15.0 15.4 16.0 16.4 17.9 $2,292
3 Continental 14.9 14.6 14.8 15.4 16.9 $2,268
4 Delta 13.0 12.9 13.7 14.4 16.8 $3,543
5 United 13.7 14.1 13.8 14.2 15.7 $3,471
6 American 11.6 11.5 12.0 12.4 13.3 $3,768
7 Alaska 11.3 12.1 11.8 10.9 12.4 $654
  Seven-Carrier Total 13.3 13.4 13.9 14.4 15.8 $17,580

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 2nd Quarter 2006 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

2Q 2006 Rank Low-Cost Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Revenue $(Millions)
1 America West 11.4 11.5 11.5 12.4 13.4 985
2 Frontier 10.7 10.9 10.6 10.7 11.6 282
3 AirTran 9.6 9.6 9.9 9.7 11.2 527
4 Spirit 9.2 8.5 8.7 8.9 11.0 122
5 Southwest 8.0 9.1 9.1 9.1 10.7 2,449
6 JetBlue 7.4 7.2 7.0 7.5 8.5 611
7 ATA 6.7 7.6 7.4 7.3 8.5 111
  Seven-Carrier Total 8.7 9.3 9.3 9.5 10.8 5,087

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 2nd Quarter 2006 Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

2Q 2006 Rank Regional Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Revenue $(Millions)
1 Comair 14.8 15.0 15.3 16.7 16.7 303
2 American Eagle 16.6 16.7 17.2 16.8 16.6 475
3 Atlantic Southeast 13.7 14.7 15.9 16.2 16.3 326
4 Sky West 15.0 15.4 15.9 15.9 15.7 465
5 Pinnacle 14.3 14.1 15.0 15.4 14.8 205
6 Mesa 12.2 12.3 12.7 14.0 14.7 289
7 Express Jet 13.0 12.8 13.2 13.3 12.6 382
  Seven-Carrier Total 14.3 14.5 15.0 15.4 15.3 2,443

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 2nd Quarter 2006 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

2Q 2006 Rank   2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Expenses $(Millions)
1 Network Carriers 13.6 14.0 15.0 15.0 14.6 16,318
2 Regional Carriers 12.7 13.4 13.7 14.0 14.1 2,250
3 Low-Cost Carriers 8.3 9.1 9.2 9.3 9.7 4,546
  21-Carrier Total 12.2 12.7 13.4 13.4 13.2 23,114

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 2nd Quarter 2006 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

2Q 2006 Rank Network Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Expenses $(Millions)
1 US Airways 15.3 16.3 17.8 18.8 17.0 1,453
2 Continental 15.7 15.9 16.7 16.6 17.0 2,285
3 Northwest 15.7 16.7 17.1 15.8 15.4 1,978
4 Delta 13.5 13.7 15.1 15.8 15.0 3,150
5 United 13.8 13.8 14.5 15.0 14.8 3,271
6 American 11.5 12.1 13.2 12.5 12.5 3,561
7 Alaska 11.3 10.6 12.2 13.9 11.7 620
  Seven-Carrier Total 13.6 14.0 15.0 15.0 14.6 16,318

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 2nd Quarter 2006 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

2Q 2006 Rank Low-Cost Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Expenses $(Millions)
1 America West 11.4 12.2 13.4 11.3 12.7 932
2 Spirit 10.2 9.7 10.6 9.5 11.4 126
3 Frontier 10.7 10.3 11.2 11.1 11.1 270
4 ATA 9.3 13.8 3.4 10.1 10.3 134
5 AirTran 9.0 9.6 9.8 9.8 10.0 473
6 Southwest 7.1 7.8 8.4 8.7 8.9 2,048
7 JetBlue 6.7 7.0 7.3 7.8 7.8 564
  Seven-Carrier Total 8.3 9.1 9.2 9.3 9.7 4,546

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 2nd Quarter 2006 Domestic Unit Costs
(Domestic Operating Expenses per Available Seat Mile in cents)

Excel | CSV

2Q 2006 Rank Regional Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Operating Expenses $(Millions)
1 Comair 14.1 14.7 15.4 16.4 16.4 297
2 American Eagle 14.2 14.6 15.4 15.0 15.3 436
3 Atlantic Southeast 12.3 13.3 13.8 14.0 14.2 283
4 Sky West 13.3 13.7 14.3 14.4 14.1 418
5 Mesa 10.5 10.7 11.4 12.7 14.1 277
6 Pinnacle 12.8 16.2 13.9 13.8 13.4 185
7 Express Jet 11.8 11.7 12.1 12.2 11.7 354
  Seven-Carrier Total 12.7 13.4 13.7 14.0 14.1 $2,250

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 2nd Quarter 2006 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

2Q 2006 Rank   2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Passenger Revenue $(Millions)
1 Regional Carriers 19.4 19.6 20.4 20.6 18.9 2,430
2 Network Carriers 11.9 11.7 12.2 12.7 13.1 12,236
3 Low-Cost Carriers 10.8 10.6 11.2 11.4 12.1 4,564
  21-Carrier Total 12.3 12.1 12.7 13.1 13.4 19,230

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 2nd Quarter 2006 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

2Q 2006 Rank Network Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Passenger Revenue $(Millions)
1 Northwest 13.3 12.9 13.1 13.5 14.5 1,581
2 US Airways 13.2 13.0 14.8 15.6 14.1 1,000
3 Alaska 12.8 13.4 14.0 13.2 13.9 578
4 Delta 11.2 10.6 11.5 11.5 13.1 2,192
5 Continental 12.2 11.6 11.9 12.5 13.0 1,496
6 American 11.7 11.5 12.1 12.7 12.6 3,041
7 United 11.1 11.3 11.6 11.9 12.6 2,348
  Seven-Carrier Total 11.9 11.7 12.2 12.7 13.1 12,236

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 2nd Quarter 2006 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

2Q 2006 Rank Low-Cost Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Passenger Revenue $(Millions)
1 AirTran 12.2 12.1 13.2 13.0 13.7 507
2 Southwest 11.7 11.4 12.3 12.4 13.0 2,313
3 Spirit 11.1 9.8 10.9 10.7 12.0 118
4 America West 10.2 10.2 10.7 11.4 11.9 716
5 Frontier 10.9 11.3 11.6 11.5 11.3 238
6 JetBlue 8.1 8.0 8.2 8.4 9.8 579
7 ATA 10.0 9.2 9.2 8.9 9.2 94
  Seven-Carrier Total 10.8 10.6 11.2 11.4 12.1 4,564

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 2nd Quarter 2006 Domestic Revenue Yield
(Domestic Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

2Q 2006 Rank Regional Carriers 2nd Quarter 2005 3rd Quarter 2005 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 2nd Quarter Passenger Revenue $(Millions)
1 Comair 20.7 21.7 22.2 23.7 21.8 303
2 American Eagle 22.6 23.0 23.4 23.8 21.2 474
3 Atlantic Southeast 19.0 19.7 21.3 20.7 20.4 326
4 Sky West 19.7 19.8 20.7 20.0 19.0 459
5 Pinnacle 19.4 18.8 19.7 21.1 18.2 203
6 Mesa 16.8 17.9 18.6 18.9 17.9 285
7 Express Jet 17.2 16.6 17.3 17.6 15.4 381
  Seven-Carrier Total 19.4 19.6 20.4 20.6 18.9 2,430

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