BTS Releases Fourth-Quarter 2007 System Airline Financial Data

A group of 20 selected passenger airlines reported a system operating loss margin of 0.02 percent in the fourth quarter of 2007, the first loss after six consecutive profitable quarters, the Bureau of Transportation Statistics (BTS) of the U.S. Department...


A group of 20 selected passenger airlines reported a system operating loss margin of 0.02 percent in the fourth quarter of 2007, the first loss after six consecutive profitable quarters, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation reported today in a release of preliminary data. The 20-carrier group consists of the 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 first loss since the first quarter of 2006. The industry’s larger airlines, the network carriers, reported an operating loss margin of 1.1 percent. Operating margin measures profit or loss as a percentage of the airline’s total operating revenue.

The 20 carriers spent 29.0 percent of their operating expenses in the fourth quarter of 2007 on fuel, compared to 13.5 percent five years earlier in the fourth quarter of 2002 (Table 5). With this quarter’s release, BTS has added tables on airline fuel expenses. See Tables 5-9.

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

The network group’s operating loss margin of 1.1 percent in the fourth quarter was a 2.8 percentage point decline from the 1.7 percent profit margin in the fourth quarter of 2006 (Table 1). The seven network carriers reported a combined operating loss of $274 million in the fourth quarter for the group’s first loss after six consecutive quarterly profits. In the fourth quarter of 2006, the seven network carriers’ operating profit was $392 million.

The regional carriers reported a 3.6 percent operating profit, down from a 7.5 percent profit margin in the fourth quarter of 2006. The seven regional carriers reported a $93 million operating profit in the fourth quarter of 2007 (Table 1).

The top three operating profit margins were all reported by regional carriers Atlantic Southeast Airlines, SkyWest Airlines and American Eagle Airlines (Table 4). Regional carrier ExpressJet Airlines and low-cost carriers Spirit Airlines and Frontier Airlines reported the worst operating loss margins (Tables 2-4). ExpressJet operates both point-to-point service under its own brand and regional service under contract for network carriers. Alaska Airlines reported the worst margin of the network airlines.

America West Airlines and US Airways are now operating under a single certificate and are reporting jointly for the first time. The combined airline’s financial numbers are included with the network carriers while US Airways’ previous numbers remain with network carriers and America West’s previous numbers are listed separately as a low-cost carrier.

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 lower infrastructure costs and higher rates 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 those airlines in each group with the highest reported operating revenue in the most recent 12-month period.

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