BTS | First Quarter 2006 Airline Financial Data: Regional and Low-Cost Passenger Airlines Report Domestic Profit; Network Carriers Report Smaller Loss

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BTS Home > Press Releases > 2006

First Quarter 2006 Airline Financial Data: Regional and Low-Cost Passenger Airlines Report Domestic Profit; Network Carriers Report Smaller Loss

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BTS 29-06
Dave Smallen
202-366-5568

Monday, June 19, 2006 - The seven largest regional and the low-cost airline group reported domestic operating profit margins ― an industry measure of profitability ― while the seven network carriers reported a smaller loss during the first quarter of 2006 compared to the same period a year earlier, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation reported today in a release of preliminary data.

The low-cost group's results for the first quarter of 2006 do not include ATA Airlines. The carrier delayed filing its first quarter financial report due to fresh start accounting issues related to the airline's emergence from bankruptcy protection earlier this year. BTS will release revised numbers following ATA's filing later this month.

BTS, a part of the Research and Innovative Technology Administration, reported that the group of regional carriers reported a domestic operating profit margin of 9.1 percent for the first quarter while a 4.2 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 network group reported a loss margin improvement to 4.2 percent in the first quarter of 2006 from 9.9 percent in the first quarter of 2005. The operating loss margin for the network group improved 5.7 percentage points for a total operating loss of $0.6 billion in the first quarter (Table 1). In the first quarter of 2005, the seven network carriers lost $1.4 billion.

The regional carrier group reported a 9.1 percent profit margin in the first quarter of 2006, a gain of 0.6 percentage points from the 8.5 percent profit margin in the first quarter of 2005. The seven regional carriers reported a $213 million operating profit in the first quarter of 2006 (Table 1). The low-cost group, without ATA, reported a 7.4 percentage point profit margin improvement over 2005 results, and a $129 domestic operating margin.

The largest percentage operating loss margins were reported by network carriers Alaska Airlines, Delta Airlines and Continental Airlines (Table 2). The top operating profit margin was reported by regional carrier Atlantic Southeast (Table 4). The other top margins were reported by regional airlines Pinnacle 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 reported the highest unit revenues in the first quarter at 15.4 cents per available seat-mile (ASM). Network carriers' unit revenues were 14.4 cents followed by the low-cost carrier group, without ATA, at 9.5 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 2.4 cents.

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

Unit costs (operating expenses divided by ASMs) were highest at the network airlines followed by the regional carriers. The low-cost carriers, without ATA, had the lowest unit costs per ASM. The network carriers also had the largest year over year gain in unit costs at 1.8 cents per ASM compared to 0.7 cents for the regional group and 0.4 cents for the low-cost carriers.

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 Spirit, JetBlue, and Southwest (Table 11).

Although the regional airlines domestic passenger yield declined from the first quarter of 2005, the group still registered the highest average yield at 20.6 cents per revenue passenger-mile (RPM). The network and low-cost carrier groups both reported yield gains over the prior year at 12.7 and 11.5 cents respectively. 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, Comair and Pinnacle (Table 16). The lowest passenger revenue yields were reported by low-cost carriers JetBlue, Spirit, and America West Airlines (Table 15). US Airways reported the highest revenue yield of any network carrier (Table 14). Passenger revenue yields for Delta Air Lines and United Airlines have lagged behind the other network carriers for the past seven quarters. The two airlines 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." Delta recently announced that Song will be reintegrated into its mainline operations.

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 June 13. Data are subject to revision.

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

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

Passenger Airlines by Group
Ranked by 1st Quarter 2006 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

First Quarter 2006 Airline Financial Data: Regional and Low-Cost Passenger Airlines Report Domestic Profit; Network Carriers Report Smaller Loss

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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