BTS | 2nd-Quarter 2009 Airline Financial Data: Airlines Report Improved Operating Margins

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BTS Home > Press Releases > 2009

2nd-Quarter 2009 Airline Financial Data: Airlines Report Improved Operating Margins

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BTS 44-09
Dave Smallen
202-366-5568

Monday, September 21, 2009 - The network, low-cost and regional airline groups all reported improved operating margins in the second quarter of 2009 (Table 1), 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 network carriers as a group posted their smallest operating margin loss for any quarter since September 2007 while the low-cost and regional groups reported profit margins. The low-cost group’s profit margin of 7.0 percent was its largest since the second quarter of 2007 while the regionals' profit margin of 7.2 percent was its largest since the fourth quarter of 2006.

The low-cost and regional performance offset the network loss margin, resulting in the 21 airlines covered in this press release achieving their first overall profitable operating margin since the third quarter of 2007. Only five of the 21 reported loss margins while the remaining 16 reported profit margins (Tables 2, 3, 4). See Airline Financial Data Press Releases for historic data.

The network group has reported loss margins for seven consecutive quarters, but the -0.5 loss margin in the most recent quarter was the smallest. In the April-to-June period, three of the seven network airlines, the group with most of the industry’s largest carriers, reported loss margins. American Airlines reported the largest loss margin of the group, followed by Continental Airlines and Delta Air Lines (Table 2).

Low-cost carrier Virgin America and regional carrier ExpressJet Airlines were the only other airlines to report loss margins in the second quarter (Tables 3, 4).

Operating margin measures profit or loss as a percentage of the airline’s total operating revenue.

The seven network airlines spent 21.7 percent of their operating expenses in the second quarter of 2009 on fuel, compared to 16.2 percent five years earlier in the second quarter of 2004 (Table 6). For airline fuel expenses, see Tables 5-8. For additional detail on airline fuel cost and consumption, see the BTS Airline Fuel Cost and Consumption web page.

The total industry collected $669.6 million in baggage fees in the second quarter of 2009, up 18.2 percent from the $566.3 million collected in the first quarter of 2009 and up 275.7 percent from the $178.2 million collected in the second quarter of 2008. Beginning in the second quarter 2008, most of the scheduled passenger carriers began charging for the first and second bags checked by passengers. Previously, additional charges were not applied until the third bag was checked.

American collected $118.4 million in the second quarter of 2009, the most of any carrier although Delta was only $86,000 behind in baggage fees revenue. See Table 1A for the 10 airlines that collected the most in baggage fees in the second quarter. For other carriers and additional historic data, go to Passenger Baggage at BTS Schedule P-12.

Operating Margins

The seven network carriers posted a loss margin of -0.5 percent in the second quarter with a combined operating loss of $111 million (Table 2). In the second quarter of 2008, these carriers reported a loss margin of -4.5 percent with a loss of $1.827 billion.

The top three operating profit margins were reported by low-cost carriers Allegiant Air, Spirit Airlines and regional carrier Comair (Table 3, 4). Low-cost carrier Virgin America, network carrier American and regional carrier ExpressJet reported the largest operating loss margins (Table 2, 3, 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 recognizes as operating under a low-cost business model, with lower infrastructure and aircraft operating costs. 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.

Fuel Expenses

The seven network carriers spent 2.92 cents per available seat-mile (ASM) for fuel in the second quarter of 2009, down from 3.08 cents per ASM in the first quarter of 2009 and down from 2.23 cents per ASM from the second quarter of 2008 (Table 5).

Network airline Delta and regional carriers American Eagle Airlines and Horizon Air spent the most for fuel per ASM while regional carriers ExpressJet and SkyWest Airlines and network carrier United Airlines spent the least (Tables 6,7).

ExpressJet’s fuel expenses have been assumed by Continental Airlines for operations that the mainline carrier has directed its regional partner to fly.

Unit Costs

Unit costs for the network carriers dropped from 16.8 cents per ASM in the second quarter of 2008 to 13.5 cents per ASM in the second quarter of 2009 (Table 9).

The carriers with the highest unit costs were regional airlines Comair, Horizon and American Eagle. The lowest unit costs were reported by regional carrier ExpressJet and low-cost carriers Allegiant and Spirit (Tables 10-12).

Unit Revenues

The seven network carriers’ unit revenues in the second quarter of 2009 were 13.4 cents per ASM compared to 15.8 cents in the second quarter of 2008 (Table 13).

The highest unit revenues were reported by regional carriers Comair, Horizon and American Eagle. The lowest unit revenues were reported by low-cost carriers Virgin America and Spirit and regional carrier ExpressJet. US Airways reported the highest unit revenues of any network airline (Tables 14-16).

Passenger Yield

The seven network airlines’ passenger yield was 11.0 cents per revenue passenger-mile (RPM) in the second quarter of 2009, down from 13.5 cents per RPM in the second quarter of 2008 (Table 17). The second quarter yield was the network carrier group’s lowest since the fourth quarter of 2003. 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 Comair, Horizon and American Eagle. The lowest passenger revenue yields were reported by low-cost carriers Allegiant and Virgin America and regional carrier ExpressJet. Alaska Airlines reported the highest passenger yield of any network carrier (Tables 18-20).

Reporting Notes

This release consists of domestic plus international, or system, financial reports for the airlines. For additional revenue and operating profit/loss numbers, go to the BTS home page and use the links in the Airline Industry box.

Airline financial data from the second quarter of 2009 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 Sept. 15. Revised carrier data and late data filings will be made available monthly on TranStats on the Monday following the second Tuesday of the month. Data are subject to revision. BTS will release third quarter financial data on Dec. 14.

Table 1: Passenger Airline System* Quarterly Operating Profit/Loss Margin (In Percent)

Airline Groups Ranked by 2nd Quarter 2009 Margin

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

2nd-Quarter 2009 Airline Financial Data: Airlines Report Improved Operating Margins

Operating Margins

Fuel Expenses

Unit Costs

Unit Revenues

Passenger Yield

Reporting Notes

Table 1: Passenger Airline System* Quarterly Operating Profit/Loss Margin (In Percent)

Table 1A: Baggage Fee Collections

Table 2: Network Airline System* Quarterly Operating Profit/Loss Margin (In Percent)

Table 3: Low-Cost System* Quarterly Operating Profit/Loss Margin (In Percent))

Table 4: Regional Airline System* Quarterly Operating Profit/Loss Margin (In Percent)

Table 5: Passenger Airline System* Fuel Costs Per Available Seat-Mile

Table 6: Network Airline System* Fuel Costs Per Available Seat-Mile

Table 7: Low-Cost Airline System* Fuel Costs Per Available Seat-Mile

Table 8: Regional Airline System* Fuel Costs Per Available Seat-Mile

Table 9: Passenger Airline System* Unit Costs

Table 10: Network Airline System* Unit Costs Network Carriers

Table 11: Low-Cost Airline System* Unit Costs

Table 12: Regional Airline System* Unit Costs

Table 13: Passenger Airline System* Unit Revenue

Table 14: Network Airline System* Unit Revenue

Table 15: Low-Cost Airline System* Unit Revenue

Table 16: Regional Airline System* Unit Revenue

Table 17: Airline System* Passenger Revenue Yield

Table 18: Network Airline System* Passenger Revenue Yield

Table 19: Low-Cost Airline System* Passenger Revenue Yield

Table 20: Regional Airlines System* Passenger Revenue Yield