Despite Airline Cost Decline in First Quarter 2009, Industry Remains Unprofitable

Despite Airline Cost Decline in First Quarter 2009, Industry Remains
Unprofitable

WASHINGTON, July 10 /PRNewswire-USNewswire/ -- The Air Transport Association
of America (ATA), the industry trade organization representing the leading
U.S. airlines, today released its quarterly Airline Cost Index, incorporating
data through the first quarter of 2009.

The composite cost index fell to 176.9 in the first quarter of 2009, down 22
percent from the first quarter of 2008, easily outpacing the 0.2 percent
decline in the U.S. Consumer Price Index (CPI). The three largest components
of the index - which includes all operating expenses as well as interest
expense - were labor, fuel and transport-related expense,* respectively. Other
highlights include the following:
-- Labor costs overtook fuel costs in the quarter, as the average price
paid for fuel fell 36.1 percent while the average cost (wages,
benefits
and payroll taxes) of employing a full-time equivalent worker rose 5.6
percent to $77,677.
-- In addition to labor, other rising cost categories included
professional
services, landing fees and other miscellaneous expenses.
-- In addition to fuel, other categories seeing year-over-year declines
in
input costs included aircraft rents and ownership, food and beverage,
maintenance material (cost of maintaining and purchasing materials for
airframes, aircraft engines, ground property and equipment),
insurance,
travel agency commissions, communication, advertising, utilities and
office supplies, transport-related expense* and interest expense.

-- The drop in the cost index helped reduce - but not eliminate - the
unfavorable gap between average break-even and actual load factors
from
6.1 percentage points to 4.6 percentage points.

"The combination of rising nonfuel costs and a significant deterioration in
passenger revenue in the first quarter proved too great to offset the
year-over-year plunge in fuel prices," said ATA Chief Economist John Heimlich.
"Consequently, airlines remain focused on seeking every feasible opportunity
to realize cost savings and generate new streams of revenue."

The ATA Airline Cost Index is the only industry analysis of its kind, tracking
quarterly and annual trends in the cost of inputs to airline production for
U.S. passenger carriers that report quarterly financial information to the
Department of Transportation. The index facilitates comparisons between the
components themselves, as well as with macroeconomic indicators.

Annually, commercial aviation helps drive $1.1 trillion in U.S. economic
activity and more than 10 million U.S. jobs. ATA airline members and their
affiliates transport more than 90 percent of all U.S. airline passenger and
cargo traffic. For more information about the industry, visit
www.airlines.org.

*This category primarily comprises payments by mainline carriers to their
regional partners to transport passengers and cargo on their behalf.

SOURCE Air Transport Association of America

Elizabeth Merida, +1-202-626-4205, or David Castelveter, +1-202-626-4033, both
of Air Transport Association of America