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Fourth-Quarter 2006 System Airline Financial Data: Passenger Airlines Report Largest Fourth-Quarter Profit Margin Since 1999

Fourth-Quarter 2006 System Airline Financial Data: Passenger Airlines Report Largest Fourth-Quarter Profit Margin Since 1999

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BTS 23-07
Dave Smallen
202-366-5568

Monday, May 14, 2007 - A group of 21 selected passenger airlines reported a system operating profit margin of 2.6 percent in the fourth quarter, down from the third quarter but the largest fourth-quarter profit margin for this group since 1999, 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 profit margin in the October-to-December period was the third consecutive quarter with a profit margin for the group. The group of regional carriers reported an operating profit margin of 10.0 percent, the network carrier group reported a 1.7 percent margin and the low-cost carriers reported a 2.7 percent profit margin (Table 1). Operating margin measures profit or loss as a percentage of the airline's total operating revenue.

This release consists of domestic plus international, or system, financial reports for the airlines.

The network group's profit margin of 1.7 percent in the fourth quarter was a 9.0 percentage point improvement from the 7.3 percent loss margin in the fourth quarter of 2005 (Table 1). The seven network carriers reported a combined operating profit of $393 million in the fourth quarter for the group's third consecutive quarterly profit margin. In the fourth quarter of 2005, the seven network carriers' operating loss was $1.6 billion.

The low-cost group's profit margin of 2.7 percent in the fourth quarter was a 0.9 percentage point improvement from a 1.8 percent profit margin in the fourth quarter of 2005. The seven carriers reported a combined $131 million operating profit in the fourth quarter of 2006 (Table 1).

The regional group's profit margin of 10.0 percent profit margin in the fourth quarter was a 1.1 percentage point improvement from the 8.9 percent profit margin in the fourth quarter of 2005. The seven regional carriers reported a $245 million operating profit in the fourth quarter of 2006 (Table 1).

The top operating profit margins were reported by regional carriers Atlantic Southeast Airlines, Pinnacle Airlines and American Eagle Airlines (Table 4). US Airways reported the top profit margin of the network carriers (Table 2). Low-cost carriers America West Airlines, Frontier Airlines, ATA Airlines and Spirit Airlines reported the largest operating loss margins (Table 3). The only other carriers to report operating loss margins were network carriers Delta Air Lines and Alaska Airlines (Table 2).

America West and US Airways report financial data separately because the carriers hold two operating certificates despite the merged business operations. They will file a merged financial report beginning with the second quarter of 2007. 

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 recognizes as operating under a low-cost business model, with fewer infrastructure costs and greater expectations of productivity. 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.

All three carrier groups reported higher or the same unit revenues compared to the fourth quarter of 2005 with the network airlines registering the biggest gains at 0.7 cents per available seat-mile (ASM). The regional carriers reported the highest unit revenues in the fourth quarter at 15.0 cents per ASM. Network carriers' unit revenues were 13.5 cents per ASM followed by the low-cost carrier group at 9.8 cents per ASM (Table 5).

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

Only the low-cost group reported higher unit costs than in the fourth quarter of 2005, reporting an increase of 0.3 cents per ASM. The regional carriers reported the highest unit costs in the fourth quarter at 13.5 cents per ASM. Network carriers' unit costs were 13.2 cents per ASM followed by the low-cost carriers at 9.5 cents per ASM (Table 9).

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

The regional airlines reported the highest average passenger yield at 19.7 cents per revenue passenger-mile (RPM) but the regionals were the only group to report lower passenger yields than in the fourth quarter of 2005. The network carriers at 12.3 cents per RPM and the low-cost carriers at 12.1 cents per RPM both reported yield gains over the fourth quarter of 2005 (Table 13). Passenger revenue yield measures passenger revenues against total travel by dividing passenger revenues by RPMs.

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

Airline financial data from the fourth quarter of 2006 and previous quarters are posted on the BTS website at TranStats, the Intermodal Transportation Database, http://www.transtats.bts.gov/Fields.asp?Table_ID=295. 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 May 2. Data are subject to revision. BTS will release first quarter 2007 financial data on June 18.

Table 1. System* Quarterly Operating profit/loss margin (in percent)
Passenger Airlines by Group
Ranked by 4th Quarter 2006 Margin

(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

4Q 2006 Rank   4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 3rd Quarter 2006 (%) 4th Quarter 2006 (%) 4th Quarter Operating Profit/Loss $(Millions)
1 Regional Carriers 8.9 9.3 8.1 8.9 10.0 245
2 Low-Cost Carriers 1.8 2.5 10.8 3.3 2.7 131
3 Network Carriers -7.3 -3.3 7.5 5.4 1.7 393
  21-Carrier Total -4.5 -1.3 8.1 5.4 2.6 769

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

* System = domestic + international

Table 2. System* Quarterly Operating profit/loss margin (in percent)
Network Carriers
Ranked by 4th Quarter 2006 Margin

(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

4Q 2006 Rank Network Carriers 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 3rd Quarter 2006 (%) 4th Quarter 2006 (%) 4th Quarter Operating Profit/Loss $(Millions)
1 US Airways -4.0 2.4 12.6 5.9 7.4 145
2 Northwest -8.6 -0.2 9.2 11.1 3.7 110
3 American -8.5 1.0 7.0 3.8 2.3 125
4 United -4.6 -3.8 5.1 6.6 0.3 15
5 Continental -3.7 -0.1 6.8 4.9 0.2 6
6 Delta -12.3 -12.8 8.0 3.0 -0.1 -3
7 Alaska -3.7 -25.1 6.3 0.5 -0.7 -5
  Seven-Carrier Total -7.3 -3.3 7.5 5.4 1.7 393

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

* System = domestic + international

Table 3. System* Quarterly Operating profit/loss margin (in percent)
Low-Cost Carriers
Ranked by 4th Quarter 2006 Margin

(Operating Profit/Loss as Percent of Total Operating Revenue

Excel | CSV

4Q 2006 Rank Low-Cost Carriers 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 3rd Quarter 2006 (%) 4th Quarter 2006 (%) 4th Quarter Operating Profit/Loss $(Millions)
1 JetBlue -4.0 -5.1 7.7 5.5 9.6 61
2 Southwest 8.2 4.9 16.4 11.2 7.6 174
3 AirTran 0.5 -1.1 10.3 -0.7 0.5 3
4 Spirit -22.3 -7.3 -3.2 -20.3 -3.7 -5
5 ATA 50.1 -13.1 -0.7 2.2 -6.6 -11
6 Frontier -4.7 -3.4 3.5 1.0 -6.9 -19
7 America West -16.7 9.4 5.9 -11.2 -7.9 -72
  Seven-Carrier Total 1.8 2.5 10.8 3.3 2.7 131

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

* System = domestic + international

Table 4. System* Quarterly Operating profit/loss margin (in percent)
Regional Carriers
Ranked by 4th Quarter 2006 Margin

(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

4Q 2006 Rank Regional Carriers 4th Quarter 2005 (%) 1st Quarter 2006 (%) 2nd Quarter 2006 (%) 3rd Quarter 2006 (%) 4th Quarter 2006 (%) 4th Quarter Operating Profit/Loss $(Millions)
1 Pinnacle 7.7 10.4 9.5 12.3 29.8 61
2 Atlantic Southeast 13.1 13.6 13.2 12.1 13.1 42
3 American Eagle 10.3 11.0 8.1 9.8 10.1 47
4 ExpressJet 10.1 9.4 8.5 8.4 8.3 35
5 Sky West 10.3 9.4 10.0 9.6 7.3 35
6 Comair -0.9 1.5 2.1 6.8 4.6 13
7 Mesa 10.3 8.9 4.1 3.7 4.3 12
  Seven-Carrier Total 8.9 9.3 8.1 8.9 10.0 245

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

* System = domestic + international

Table 5. System* Airline Unit Revenue (Cents Per Mile)
Passenger Airlines by Group
Ranked by 4th Quarter 2006 Unit Revenue

(Operating Revenue Per Available Seat Mile)

Excel | CSV

4Q 2006 Rank   4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Revenue $(Millions)
1 Regional Carriers 15.0 15.4 15.2 15.0 15.0 2,450
2 Network Carriers 12.8 13.1 14.4 14.1 13.5 22,868
3 Low-Cost Carriers 9.3 9.5 10.9 10.1 9.8 4,842
  21-Carrier Total 12.2 12.5 13.8 13.3 12.8 30,160

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

* System = domestic + international

Table 6. System* Airline Unit Revenue (Cents Per Mile)
Network Carriers
Ranked by 4th Quarter 2006 Unit Revenue

(Operating Revenue Per Available Seat Mile)

Excel | CSV

4Q 2006 Rank Network Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Revenue $(Millions)
1 US Airways 15.0 15.9 18.4 16.7 16.6 1,953
2 Northwest 13.9 14.1 15.2 15.3 13.9 2,992
3 Delta 12.6 12.8 14.6 14.0 13.9 4,194
4 Continental 13.0 13.2 14.6 14.1 13.6 3,132
5 United 12.6 12.9 14.1 14.0 13.0 4,587
6 American 12.1 12.5 13.4 13.1 12.8 5,378
7 Alaska 10.6 10.7 12.2 12.4 11.0 632
  Seven-Carrier Total 12.8 13.1 14.4 14.1 13.5 22,868

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

* System = domestic + international

Table 7. System* Airline Unit Revenue (Cents Per Mile)
Low-Cost Carriers
Ranked by 4th Quarter 2006 Unit Revenue

(Operating Revenue Per Available Seat Mile)

Excel | CSV

4Q 2006 Rank Low-Cost Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Revenue $(Millions)
1 America West 11.5 12.3 13.5 12.6 12.6 906
2 Frontier 10.5 10.3 11.4 11.2 10.1 266
3 Southwest 9.1 9.1 10.7 9.8 9.5 2,276
4 AirTran 9.9 9.6 11.2 9.8 9.3 462
5 Spirit 8.7 8.8 11.1 9.7 9.1 132
6 JetBlue 7.0 7.5 8.5 8.3 8.7 634
7 ATA 8.5 8.9 9.9 9.7 8.6 166
  Seven-Carrier Total 9.3 9.5 10.9 10.1 9.8 4,842

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

* System = domestic + international

Table 8. System* Airline Unit Revenue (Cents Per Mile)
Regional Carriers
Ranked by 4th Quarter 2006 Unit Revenue

(Operating Revenue Per Available Seat Mile)

Excel | CSV

4Q 2006 Rank Regional Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Revenue $(Millions)
1 Comair 15.3 16.7 16.7 17.2 16.9 283
2 American Eagle 17.4 17.1 16.9 17.2 16.5 470
3 Atlantic Southeast 15.5 15.9 15.9 14.4 16.0 320
4 Sky West 15.9 15.9 15.7 15.5 14.9 470
5 Mesa 12.7 14.0 14.7 14.9 14.3 279
6 Pinnacle 15.0 15.4 14.8 14.2 13.9 205
7 ExpressJet 13.1 13.1 12.5 12.3 12.9 423
  Seven-Carrier Total 15.0 15.4 15.2 15.0 15.0 2,450

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

* System = domestic + international

Table 9. System* Airline Unit Costs (Cents per Mile)
Passenger Airlines by Group
Ranked by 4th Quarter 2006 Unit Costs

(Operating Expenses per Available Seat Mile in cents)

Excel | CSV

4Q 2006 Rank   4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Expenses $(Millions)
1 Regional Carriers 13.6 13.9 13.9 13.7 13.5 2,205
2 Network Carriers 13.7 13.5 13.4 13.3 13.2 22,475
3 Low-Cost Carriers 9.2 9.2 9.7 9.8 9.5 4,711
  21-Carrier Total 12.8 12.7 12.7 12.6 12.5 29,391

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

* System = domestic + international

Table 10. System* Airline Unit Costs (Cents per Mile)
Network Carriers
Ranked by 4th Quarter 2006 Unit Costs

(Operating Expenses per Available Seat Mile in cents)

Excel | CSV

4Q 2006 Rank Network Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Expenses $(Millions)
1 US Airways 15.6 15.6 16.1 15.7 15.4 1,808
2 Delta 14.1 14.4 13.4 13.6 13.9 4,197
3 Continental 13.5 13.3 13.6 13.4 13.6 3,126
4 Northwest 15.1 14.2 13.8 13.6 13.4 2,882
5 United 13.1 13.4 13.4 13.0 13.0 4,572
6 American 13.1 12.3 12.4 12.6 12.5 5,253
7 Alaska 11.0 13.3 11.4 12.3 11.1 637
  Seven-Carrier Total 13.7 13.5 13.4 13.3 13.2 22,475

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

* System = domestic + international

Table 11. System* Airline Unit Costs (Cents per Mile)
Low-Cost Carriers
Ranked by 4th Quarter 2006 Unit Costs

(Operating Expenses per Available Seat Mile in cents)

Excel | CSV

4Q 2006 Rank Low-Cost Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Expenses $(Millions)
1 America West 13.4 11.1 12.7 14.1 13.6 978
2 Frontier 11.0 10.7 11.0 11.1 10.8 285
3 Spirit 10.6 9.5 11.5 11.7 9.4 137
4 AirTran 9.8 9.7 10.0 9.9 9.2 459
5 ATA 4.2 10.0 10.0 9.5 9.1 177
6 Southwest 8.4 8.7 8.9 8.7 8.8 2,102
7 JetBlue 7.3 7.8 7.8 7.9 7.9 573
  Seven-Carrier Total 9.2 9.2 9.7 9.8 9.5 4,711

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

* System = domestic + international

Table 12. System* Airline Unit Costs (Cents per Mile)
Regional Carriers
Ranked by 4th Quarter 2006 Unit Costs

(Operating Expenses per Available Seat Mile in cents)

Excel | CSV

4Q 2006 Rank Regional Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Operating Expenses $(Millions)
1 Comair 15.4 16.4 16.4 16.0 16.1 270
2 American Eagle 15.6 15.2 15.5 15.5 14.8 423
3 Atlantic Southeast 13.5 13.8 13.8 12.6 13.9 278
4 SkyWest 14.3 14.4 14.1 14.0 13.8 435
5 Mesa 11.4 12.7 14.1 14.4 13.7 267
6 ExpressJet 11.8 11.9 11.4 11.2 11.9 389
7 Pinnacle 13.9 13.8 13.4 12.5 9.7 144
  Seven-Carrier Total 13.6 13.9 13.9 13.7 13.5 2,205

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

* System = domestic + international

Table 13. System* Passenger Revenue Yield (Cents per Mile)
Passenger Airlines by Group
Ranked by 4th Quarter 2006 Revenue Yield

(Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

4Q 2006 Rank   4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Passenger Revenue $(Millions)
1 Regional Carriers 20.3 20.5 18.9 19.3 19.7 2,434
2 Network Carriers 11.9 12.1 12.7 12.6 12.3 16,476
3 Low-Cost Carriers 11.4 11.6 12.3 11.9 12.1 4,342
  21-Carrier Total 12.3 12.5 13.0 12.9 12.7 23,252

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

* System = domestic + international

Table 14. System* Passenger Revenue Yield (Cents per Mile)
Network Carriers
Ranked by 4th Quarter 2006 Revenue Yield

(Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

4Q 2006 Rank Network Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Passenger Revenue $(Millions)
1 US Airways 13.7 13.5 14.1 13.2 13.5 1,217
2 Alaska 12.5 12.8 13.6 13.9 13.0 552
3 American 12.3 12.9 12.8 12.8 12.8 4,241
4 Northwest 11.7 11.9 12.7 13.1 12.2 2,164
5 Continental 11.7 12.0 12.6 12.2 12.1 2,234
6 Delta 11.4 11.2 12.5 11.9 11.8 2,784
7 United 11.2 11.5 12.0 12.3 11.6 3,284
  Seven-Carrier Total 11.9 12.1 12.7 12.6 12.3 16,476

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

* System = domestic + international

Table 15. System* Passenger Revenue Yield (Cents per Mile)
Low-Cost Carriers
Ranked by 4th Quarter 2006 Revenue Yield

(Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

4Q 2006 Rank Low-Cost Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Passenger Revenue $(Millions)
1 AirTran 13.3 13.1 13.8 12.9 12.8 440
2 Southwest 12.3 12.4 13.0 12.4 12.7 2,142
3 ATA 12.4 13.4 13.0 13.1 12.3 161
4 America West 10.8 11.5 12.0 11.6 11.7 657
5 Frontier 11.6 11.3 11.3 11.8 11.7 226
6 Spirit 10.9 11.0 12.2 10.9 11.1 123
7 JetBlue 8.2 8.4 9.8 9.7 10.2 593
  Seven-Carrier Total 11.4 11.6 12.3 11.9 12.1 4,342

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

* System = domestic + international

Table 16. System* Passenger Revenue Yield (Cents per Mile)
Regional Carriers
Ranked by 4th Quarter 2006 Revenue Yield

(Passenger Revenue per Revenue Passenger Mile in cents)

Excel | CSV

4Q 2006 Rank Regional Carriers 4th Quarter 2005 1st Quarter 2006 2nd Quarter 2006 3rd Quarter 2006 4th Quarter 2006 4th Quarter Passenger Revenue $(Millions)
1 Comair 22.2 23.7 21.8 22.8 22.7 283
2 American Eagle 23.7 24.1 21.5 22.8 22.5 469
3 Atlantic Southeast 20.8 20.3 19.9 19.0 21.6 320
4 Sky West 20.7 20.0 19.0 19.0 18.9 464
5 Mesa 18.6 18.9 17.9 19.2 18.5 274
6 Pinnacle 19.7 21.1 18.2 18.5 18.4 202
7 Express Jet 17.2 17.4 15.3 15.7 16.7 422
  Seven-Carrier Total 20.3 20.5 18.9 19.3 19.7 2,434

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

* System = domestic + international