Airlines’ operating margins improve

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Published: September 23,2009

Tags: transportation, travel

The network, low-cost and regional airline groups all reported improved operating margins in the second quarter of 2009, the Bureau of Transportation Statistics (BTS) reports.

According to the BTS, network carriers as a group posted their smallest operating margin loss for any quarter since Sept. 2007 while the low-cost and regional groups reported profit margins. The low-cost group’s profit margin of 7 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 here 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

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.

Low-cost carrier Virgin America and regional carrier ExpressJet Airlines were the only other airlines to report loss margins in the second quarter.

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.

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.

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