CASE QUESTIONS

1. Using the quarterly data for operating costs and the various cost drivers of costs provided in the spreadsheet, estimate regressions for each of the ten cost categories listed above. Then, write the appropriate cost function for each category of cost and interpret your regression results. For example, your first regression would have salaries and wages as your dependent variable and available seat miles as independent variable.

2. Based on your regression results and your interpretation of those results, where do you see the largest reductions in costs if flying capacity is lowered by 11 percent? Also, in which areas do you see opportunities to achieve further cost reductions? Why?

3. The table below provides a quarterly forecast of revenues, jet fuel prices,5

and the projected operating activity for 2009. Using the information from your regressions and the forecast information provided, estimate Continentals operating costs and expected profit for the upcoming fiscal year.

4. Based on the results of your profitability analysis, what can you say about the firms financial outlook? Would Continental be earning an operating profit in 2009? If not, what should Continentals management do to restore profitability in 2009?

5. Summarize your conclusions in a memorandum addressed to Continentals CEO. In the memo, you must clearly communicate your main findings, emphasizing specific areas in which you see the greatest potential to achieve further reductions in costs and, based on your profitability analysis, sum up the financial outlook for 2009.

Continental Airlines Case Study THE DECISION CONTEXT In 2008, the senior management team at Continental Airlines, commanded by Lawrence Kellner, the Chairman and Chief Executive Officer, convened a special meeting to discuss the firm's latest quarterly financial results. A bleak situation lay before them. Continental had incurred an operating loss of $71 million dollarsits second consecutive quarterly earnings decline that year. Likewise, passenger volume was significantly down, dropping by nearly 5 percent from the prior year's quarter. Continental's senior management needed to act swiftly to reverse this trend and return to profitability. Being the fourth largest airline in the U.S. and eighth largest in the world, Continental was perceived as one of the most efficiently run companies in the airline industry. Nonetheless, 2008 brought unprecedented challenges for Continental and the entire industry as the United States and much of the world was heading into a severe economic recession. Companies cutting deeply into their budgets for business travel, the highest yielding component of Continental's total revenue, together with a similar downward trend from the leisure and casual sector, combined to sharply reduce total revenue. Concurrent with this revenue decline, the price of jet fuel soared to record levels during 2008.1 Thus, while revenue was decreasing, Continental was paying almost twice as much in fuel costs. Interestingly, fuel costs surpassed the firm's salaries and wages as the highest cost in Continental's cost structure. This obviously had a negative impact on the bottom line, squeezing even further the already strained profit margins. The outlook for a quick recovery in the U.S. economy and, consequently, an upturn in the demand for air travel in the short term did not seem likely. Continental's internal forecasts indicated that a further decline in passenger volume should be anticipated throughout 2009, with a recovery in travel possibly occurring by the middle of 2010. To summarize, adverse economic conditions in the U.S., coupled with the rise in fuel costs, were dragging down Continental's profits and relief was unlikely through the foreseeable future. Given the situation described above, management needed to act swiftly to restore profitability. Several strategic options were evaluated. Since the U.S. and much of the world was facing asevere recession, the prospect for growing revenues by either raising airfares or passenger volume seemed futile. Contrary to raising revenue, Continental's managers believed that raising fares could potentially erode future revenues beyond the present level. Discounting fares did not seem a plausible solution either, because given the severity of the economic situation a fare cut could fall short in stimulating additional passenger demand and lead to lowering revenues. 1 To illustrate, jet fuel is tied to the price of oil and, over the past year, oil prices surged from about $70 to $135 per barrel. Consequently, the price of jet fuel increased markedly, from an average of $1.77 per gallon to $4.20 by the mid-summer of 2008. Thus, because management anticipated that revenues would remain flat for most of the year,the only viable short-term solution to restoring profits was a substantial and swift reduction inoperating costs. This could most effectively be accomplished in two ways. First, through a reductionin flying capacity adjusted to match projected passenger demand. With this in mind, Continental'smanagement agreed to reduce flying capacity by 11 percent on domestic and internationalroutes.2 As a result of this action, Continental would eliminate the least profitable (or unprofitable)flights and, accordingly, would ground several planes in the fleet. Management anticipated that thisdecision would reduce several of the firm's operating costs. Apart from this, Continental could achieve further reductions in costs by implementing severalcost-cutting initiatives and through operational efficiencies. For example, management projected that it could achieve reductions in Passenger Services expenses by consolidating several tasks during passenger check-in and by reducing food and beverage waste served during flights. Additionally, the firm could reduce various miscellaneous expenses through targeted cuts in discretionary spending. In sum, to close the gap in profitability, Continental's strategy was geared toward slashing operating costs by cutting capacity and through aggressive identification and implementation of cost-cutting initiatives. The next step would be for management to know precisely how their decision to downsize capacity would impact the firm's future operating costs, and also identify specific areas in which the firm could achieve additional cost reductions. Additionally, the cost analysis would help forecast the firm's operating costs and projected profits (or losses) for the upcoming fiscal year. However, before we can proceed with such analysis, an examination of how the various categories of Continental's costs behave is in order. Before we begin, let us prepare with an overview of the airline industry and its competitive landscape, and an understanding of why cost behavior bears particular relevance in this case. Relative to other industries, airlines are a very difficult business to manage. In particular, they are exposed to tremendous risks brought by volatility inherent in their business model, as they deal with high fixed costs, labor unions, instability in fuel prices, weather and natural disasters, passenger safety, and security regulations. These aspects bring a large burden to airlines' cost structures. Moreover, competition within the industry is fierce; the proliferation of discount carriers, such as Southwest Airlines and, most recently, Jet Blue, and the end of fare regulation in 1978, has hindered airlines' pricing power and their ability to spur revenues. For these reasons, cost containment is a critically important aspect of profitability in this industry. In order for Continental to restore profitability in this harsh environment of weak demand for air travel, it must be able to contain its operating costs, especially its massive fixed costs, which are visible in several ways. For example, salaries for pilots, flight attendants, and mechanics, as well as aircraft leasing costs, are typically fixed, varying little with shifts in passenger volume. Because fixed costs typically embody the amount of operating capacity of a firm, they are 2 Specifically, on June 13, 2008, Continental Airlines announced that it planned to reduce its flight capacity by 11 percent.By shrinking capacity, Continental expected to reduce the number of domestic and international flights from its threemajor hubs in Houston, Cleveland, and Newark (Maynard 2008). commonly referred as \"capacity\" costs. Since fixed costs do not self-adjust to fluctuations in passengervolume, the only way in which they can be decreased (or increased) is if management adjusts them in accordance to the level of operating capacity. In contrast, other costs, such as passenger services and reservation and distribution costs, behave as variable and would selfadjust with variations in volume or operating activity. Hence, to assess the impact of this strategic decision to alter Continental's cost structure, and identify the areas that could achieve the greatest reduction in costs, we must resolve how Continental's operating costs behave and what drives them. In what follows, we learn how to apply regression analyses to examine cost behavior and forecast future costs, and then use that knowledge to assess how the reduction in flying capacity would affect Continental's operating costs and profitability in the near term. ESTIMATING COSTS USING REGRESSION ANALYSES The previous discussion highlighted the importance of examining the behavior of Continental's operating costs to pave the way for a cost and profitability analysis using regression analysis.Regression analysis is a powerful statistical tool that is frequently used by firms to examine costbehavior and predict future costs. The idea behind regression analysis is straightforward: historicaldata for costs, and the various activities that could potentially drive operating costs, are insertedinto a mathematical calculation which yields the average amount of change in that particular costthat has occurred over time. Average values provided by regression calculations may then beapplied to estimate future change that will occur in that cost given a one-unit change in one or more of the business activities which drive that cost. 3More precisely, in a regression model, cost is a function of one or more business activities (or factors)underlying a business operation. Simply put, the business activities are the drivers of operating costs. Therefore, since activities drive costs, our first step in the estimation of a cost function is to identify the underlying activities or other potential factors that drive the cost in questionthe cost drivers. This requires extensive knowledge of the business operation. In the case of Continental Airlines, the potential drivers of operating costs vary greatly. For instance, as previously noted, the number of passengers that Continental flies may drive the costs related to Passenger Services. Likewise, Aircraft Maintenance and Repairs costs could be driven by the number of aircraft in the fleet and by the level of flying capacity set by Continental (i.e., available seat miles). In synthesis, to predict how Continental's operating costs would be affected by the decision to reduce capacity, and to identify those areas in which additional room is available for cost cutting, we need to identify which costs in this firm's cost structure behave as variable, fixed, or mixed (in which elements of both variable and fixed are observable). Equally important, we should also identify the specific drivers (if any)of each cost. Your job is to assist management in their quest to restore profitability at Continental Airlines. Specifically, you must conduct regression analyses to examine cost behavior and then use this information to forecast operating costs and profitability for the upcoming year. As part of your 3 For ease in exposition, cost functions and regression analyses are discussed briefly here. For further insight on cost functions and the mechanics of regression analyses, refer to the Appendix. cost analysis, you should investigate how the decision to cut flying capacity would impact the firm's future operating costs and, equally important, identify those specific expense categories (or operating areas)in which this firm could attain additional cost saving by implementing costcutting initiatives. Your conclusions should be outlined in a memorandum directed to Continental's ExecutiveManagement team. You are provided next with a description of Continental's operating costs and the potential drivers of costs so you can conduct regression analysis to estimate the corresponding cost functions. To help you in estimating the regressions, a comprehensive set of instructions for performing regression analysis using Microsoft Excel is provided in the Appendix. Immediately following the description of costs, a series of questions is provided that should help guide your analysis. Additionally, to help you estimate your regressions, the Excel Spreadsheet accompanying this casepresents past quarterly data for all of the above expenditures for the period of January 2000 through December 2008, and also quarterly operations data over the same period. CONTINENTAL'S OPERATING COSTS AND POTENTIAL COST DRIVERS The spreadsheet provides ten categories of operating costs, including salaries and wages, aircraft fuel and related taxes, aircraft rentals, airport fees, aircraft maintenance and repairs, depreciation and amortization, distribution costs, passenger services, regional capacity purchases, and other expenses. Of these, some represent a single expense item. For example, the cost of aircraft rentals and airport fees together comprise a single cost item. Other costs represent cost pools comprising several cost items. Such is the case of passenger services and other expenses. The following provides a detailed description of each cost, along with the potential cost drivers. Salaries and wages This account represents costs related to salaries and wages, as well as fringe benefits, of Continental's workers. These include salaries for pilots and wages for flight attendants and ground crew, as well as wages for Continental's mechanics. Additionally, a significant portion of this salary pool represents wages of reservation specialists, customer service representatives at airports, and the salaries for administrative and support personnel (e.g., flight schedulers, technologypersonnel, accountants, and division managers. A possible cost driver of salaries is the available seat miles. 4 Aircraft fuel and related taxes This represents the cost of jet fuel and related fuel taxes. Jet fuel cost tends to be driven by the current price of jet fuel and gallons of jet fuel consumed. Aircraft rentals These are expenses for capital leases of aircraft. The main driver is the number of leased planesin Continental's fleet, including regional jets operated on behalf of Continental by four regional airlines under various capacity purchase agreements. 4 Available seat miles is calculated as the number of seats available for passengers multiplied by the number of scheduled miles those seats are flown. Airport fees Represents landing fees and passenger security fees paid to the various domestic and international airports where Continental flies. Landing fees are driven by the number of passengers. Aircraft maintenance and repairs These are expenses associated with the service and maintenance of planes. These include expenses related to scheduled maintenance, spare parts and materials, and airframe and engine overhauls. The main drivers of these costs are the number of planes in the fleet and the number of miles flown. Depreciation and amortization This represents depreciation and amortization expenses of aircraft, ground equipment, buildings, and other property. It must be emphasized that the largest portion of depreciation expense relates to the depreciation of aircraft. Although depreciation expenses are driven by the acquisition cost of Continental's capital assets, depreciation is greatly influenced by both company policy and accounting principles, such as the depreciation method, that a firm adopts. Distribution costs These expenses represent credit card discount fees, booking fees, and travel agency commissions, all of which are affected by passenger revenue. Therefore, the driver of these costs is total revenue. Passenger services This is also a cost pool that includes expenses related to processing and servicing passengers prior to take-off, during flight, and after arrival at their destination. A significant portion of these costs is generated by Continental's Field Services Division, the main function of which is to provide service to planes prior to take-off. Some of these expenses relate to checking in passengers, handling luggage on and off planes, cleaning planes, stocking planes with beverage and food, and refueling the aircraft prior to take-off. The potential cost driver of these costs is the number of passengers. Regional capacity purchases These are costs related to the purchase of regional routes served by several regional airlines on behalf of Continental (ExpressJet, Chautauqua, CommutAir, and Cogan). These costs are driven by the combined flying capacity of the four airlines: available regional seat miles. Other expenses This is a cost pool that comprises many ancillary and discretionary expenditures, including technology expenses, security and outside services, general supplies, and advertising and promotional expenses. Further, this cost pool contains various special charges for gains and losses from the sale of retired aircraft and costs of future leases. Given the large variety of miscellaneous items, there is no clear driver of these expenses; however, a large portion of them, such as advertising and promotional expenses, are driven by total revenue. CASE QUESTIONS 1. Using the quarterly data for operating costs and the various cost drivers of costs provided in the spreadsheet, estimate regressions for each of the ten cost categories listed above. Then, write the appropriate cost function for each category of cost and interpret your regression results. For example, your first regression would have \"salaries and wages\" as your dependent variable and \"available seat miles\" as independent variable. 2. Based on your regression results and your interpretation of those results, where do you see the largest reductions in costs if flying capacity is lowered by 11 percent? Also, in which areas do you see opportunities to achieve further cost reductions? Why? 3. The table below provides a quarterly forecast of revenues, jet fuel prices, 5 and the projected operating activity for 2009. Using the information from your regressions and the forecast information provided, estimate Continental's operating costs and expected profit for the upcoming fiscal year. 4. Based on the results of your profitability analysis, what can you say about the firm's financial outlook? Would Continental be earning an operating profit in 2009? If not, what should Continental's management do to restore profitability in 2009? 5. Summarize your conclusions in a memorandum addressed to Continental's CEO. In the memo, you must clearly communicate your main findings, emphasizing specific areas in which you see the greatest potential to achieve further reductions in costs and, based on your profitability analysis, sum up the financial outlook for 2009. 5 You should note that Continental has entered into several future contracts to hedge the exposed risks of rising fuel prices. The projected costs for jet fuel on exhibit reflects the value of the various future contracts which guarantee Continental a fixed price for jet fuel at various maturity dates in 2009, as well the estimated gallons of fuel that Continental plans to use during the year. Guidelines to Writing a Memorandum 1. Begin your memorandum with a general statement about the core issue you are discussing. 2. The second paragraph should include a short explanation as to how you arrive at your conclusion. Specifically, it must describe how the analysis was conducted (i.e., regression analysis)and the assumptions taken. 3. The memorandum should then incorporate a more detailed discussion of the findings supporting your conclusion. Specifically,indicate which areas would experience the largest reductionin costs and how that can be achieved. Also discuss the profit outlook for 2009 and provide a list of recommendations to further reduce operating costs to reverse losses and return the company to profitability. 4. Pay special attention to grammar, including spelling, fragmented, and convoluted sentences. Focus on parsimony over length, as long as clarity and understanding are notjeopardized. The memo should not exceed three pages double-spaced. (Note: memos are typically single-spaced, but double-spaced between paragraphs.) References Maynard, M. 2008. Big airlines in a rush go small. The New York Times (June 6). Obs. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Period 1Q-2000 2Q-2000 3Q-2000 4Q-2000 1Q-2001 2Q-2001 3Q-2001 4Q-2001 1Q-2002 2Q-2002 3Q-2002 4Q-2002 1Q-2003 2Q-2003 3Q-2003 4Q-2003 1Q-2004 2Q-2004 3Q-2004 4Q-2004 1Q-2005 2Q-2005 3Q-2005 4Q-2005 1Q-2006 2Q-2006 3Q-2006 4Q-2006 1Q-2007 2Q-2007 3Q-2007 4Q-2007 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Revenues 2,277,000,000 2,571,000,000 2,622,000,000 2,429,000,000 2,451,000,000 2,556,000,000 2,223,000,000 1,739,000,000 1,993,000,000 2,192,000,000 2,178,000,000 2,039,000,000 2,042,000,000 2,216,000,000 2,365,000,000 2,247,000,000 2,307,000,000 2,553,000,000 2,602,000,000 2,437,000,000 2,505,000,000 2,857,000,000 3,001,000,000 2,845,000,000 2,947,000,000 3,507,000,000 3,518,000,000 3,156,000,000 3,179,000,000 3,710,000,000 3,820,000,000 3,523,000,000 3,570,000,000 4,044,000,000 4,072,000,000 3,471,000,000 Fuel Salaries and Wages Capacity Purchases 334,000,000 672,000,000 313,000,000 719,000,000 354,000,000 748,000,000 392,000,000 736,000,000 345,000,000 758,000,000 349,000,000 800,000,000 322,000,000 779,000,000 213,000,000 684,000,000 208,000,000 732,000,000 254,000,000 746,000,000 276,000,000 743,000,000 285,000,000 738,000,000 347,000,000 778,000,000 302,000,000 762,000,000 316,000,000 778,000,000 290,000,000 738,000,000 158,000,000 333,000,000 688,000,000 317,000,000 387,000,000 711,000,000 328,000,000 414,000,000 703,000,000 347,000,000 453,000,000 717,000,000 359,000,000 470,000,000 715,000,000 353,000,000 575,000,000 649,000,000 382,000,000 684,000,000 646,000,000 406,000,000 714,000,000 639,000,000 431,000,000 672,000,000 661,000,000 415,000,000 744,000,000 791,000,000 454,000,000 858,000,000 743,000,000 475,000,000 760,000,000 680,000,000 447,000,000 684,000,000 726,000,000 430,000,000 842,000,000 821,000,000 444,000,000 895,000,000 836,000,000 446,000,000 933,000,000 744,000,000 473,000,000 1,048,000,000 729,000,000 506,000,000 1,363,000,000 704,000,000 589,000,000 1,501,000,000 765,000,000 553,000,000 993,000,000 760,000,000 425,000,000 Aircraft Rentals Landing Fees Distribution Costs Aircraft Maintenance Depreciation 206,000,000 129,000,000 248,000,000 159,000,000 95,000,000 210,000,000 138,000,000 261,000,000 171,000,000 98,000,000 215,000,000 133,000,000 255,000,000 167,000,000 102,000,000 213,000,000 132,000,000 217,000,000 149,000,000 107,000,000 214,000,000 141,000,000 243,000,000 160,000,000 105,000,000 223,000,000 153,000,000 230,000,000 162,000,000 111,000,000 230,000,000 139,000,000 194,000,000 142,000,000 120,000,000 236,000,000 148,000,000 142,000,000 104,000,000 131,000,000 228,000,000 161,000,000 172,000,000 114,000,000 106,000,000 231,000,000 160,000,000 158,000,000 119,000,000 112,000,000 227,000,000 163,000,000 138,000,000 119,000,000 112,000,000 216,000,000 149,000,000 124,000,000 124,000,000 114,000,000 223,000,000 152,000,000 127,000,000 133,000,000 116,000,000 224,000,000 152,000,000 138,000,000 126,000,000 110,000,000 225,000,000 165,000,000 131,000,000 135,000,000 110,000,000 224,000,000 151,000,000 135,000,000 115,000,000 108,000,000 220,000,000 160,000,000 137,000,000 112,000,000 104,000,000 222,000,000 163,000,000 140,000,000 102,000,000 105,000,000 224,000,000 171,000,000 139,000,000 107,000,000 104,000,000 225,000,000 160,000,000 136,000,000 93,000,000 102,000,000 227,000,000 171,000,000 138,000,000 112,000,000 99,000,000 229,000,000 181,000,000 154,000,000 106,000,000 98,000,000 234,000,000 182,000,000 154,000,000 116,000,000 97,000,000 238,000,000 174,000,000 142,000,000 121,000,000 95,000,000 245,000,000 185,000,000 160,000,000 127,000,000 96,000,000 248,000,000 198,000,000 178,000,000 140,000,000 97,000,000 249,000,000 195,000,000 157,000,000 140,000,000 99,000,000 248,000,000 186,000,000 155,000,000 140,000,000 99,000,000 248,000,000 193,000,000 161,000,000 144,000,000 99,000,000 248,000,000 190,000,000 176,000,000 169,000,000 101,000,000 249,000,000 209,000,000 171,000,000 166,000,000 106,000,000 249,000,000 198,000,000 174,000,000 142,000,000 107,000,000 247,000,000 207,000,000 182,000,000 159,000,000 106,000,000 246,000,000 210,000,000 194,000,000 167,000,000 108,000,000 244,000,000 225,000,000 182,000,000 152,000,000 112,000,000 240,000,000 210,000,000 159,000,000 135,000,000 111,000,000 Passenger Services Other Expenses 85,000,000 286,000,000 91,000,000 284,000,000 97,000,000 288,000,000 89,000,000 277,000,000 91,000,000 318,000,000 96,000,000 295,000,000 89,000,000 121,000,000 71,000,000 166,000,000 77,000,000 382,000,000 73,000,000 454,000,000 78,000,000 276,000,000 68,000,000 277,000,000 70,000,000 320,000,000 73,000,000 91,000,000 81,000,000 250,000,000 73,000,000 455,000,000 69,000,000 304,000,000 76,000,000 279,000,000 84,000,000 287,000,000 77,000,000 278,000,000 77,000,000 316,000,000 84,000,000 280,000,000 91,000,000 282,000,000 80,000,000 305,000,000 82,000,000 293,000,000 90,000,000 323,000,000 97,000,000 313,000,000 87,000,000 333,000,000 90,000,000 340,000,000 99,000,000 357,000,000 105,000,000 357,000,000 95,000,000 328,000,000 96,000,000 356,000,000 107,000,000 427,000,000 113,000,000 461,000,000 91,000,000 372,000,000 Obs. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Period 1Q-2000 2Q-2000 3Q-2000 4Q-2000 1Q-2001 2Q-2001 3Q-2001 4Q-2001 1Q-2002 2Q-2002 3Q-2002 4Q-2002 1Q-2003 2Q-2003 3Q-2003 4Q-2003 1Q-2004 2Q-2004 3Q-2004 4Q-2004 1Q-2005 2Q-2005 3Q-2005 4Q-2005 1Q-2006 2Q-2006 3Q-2006 4Q-2006 1Q-2007 2Q-2007 3Q-2007 4Q-2007 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Total Aircraft 514 522 535 522 548 557 501 522 538 570 570 554 562 570 570 579 586 587 592 594 598 604 611 622 630 634 648 648 630 625 631 628 641 630 653 632 Leased Aircraft Flights 403 98,820 410 97,871 414 97,967 398 98,378 406 98,590 416 99,018 377 98,564 393 81,109 400 81,883 404 82,815 401 81,737 410 78,809 419 75,178 428 75,617 428 76,297 434 75,650 437 74,859 440 75,816 445 74,211 448 74,443 453 71,494 459 74,651 466 74,630 477 75,886 483 74,962 484 77,729 482 77,468 480 79,030 446 78,601 418 82,582 415 81,118 415 80,850 414 76,719 390 76,096 412 78,599 397 76,000 Passengers 11,201,000 12,084,000 12,155,000 11,456,000 11,220,000 12,256,000 11,254,000 9,508,000 12,062,000 13,099,000 13,006,000 12,874,000 11,518,000 13,044,000 13,727,000 13,769,000 12,810,000 14,558,000 14,862,000 14,252,000 14,122,000 15,540,000 15,905,000 15,448,000 15,594,000 17,596,000 17,328,000 16,601,000 16,176,000 18,120,000 17,901,000 16,733,000 16,440,000 17,108,000 17,962,000 15,183,000 Available Seat Miles 20,951,000,000 21,384,000,000 22,356,000,000 21,409,000,000 21,459,000,000 22,813,000,000 21,994,000,000 18,219,000,000 20,375,000,000 22,286,000,000 22,626,000,000 21,054,000,000 20,843,000,000 21,241,000,000 22,819,000,000 21,907,000,000 22,670,000,000 24,150,000,000 24,674,000,000 23,588,000,000 23,585,000,000 25,482,000,000 26,833,000,000 25,720,000,000 26,117,000,000 28,259,000,000 29,262,000,000 27,280,000,000 27,250,000,000 29,592,000,000 30,346,000,000 28,550,000,000 28,376,000,000 30,304,000,000 30,383,000,000 26,448,000,000 Available Seat Miles Regional Passenger Miles Flown Employees Fuel Price 15,005,000,000 45,000 $0.83 16,491,000,000 45,500 $0.80 17,325,000,000 46,000 $0.87 15,340,000,000 45,944 $0.89 15,114,000,000 38,396 $0.86 17,053,000,000 39,000 $0.82 16,206,000,000 39,500 $0.82 12,767,000,000 39,461 $0.83 14,867,000,000 40,229 $0.64 16,489,000,000 41,011 $0.72 16,960,000,000 41,809 $0.76 17,252,000,000 40,244 $0.74 1,767,000,000 14,352,000,000 38,960 $1.03 2,073,000,000 16,129,000,000 39,000 $0.88 1,605,000,000 18,041,000,000 39,500 $0.86 2,980,000,000 16,412,000,000 39,000 $0.87 2,400,000,000 16,255,000,000 38,240 $1.04 2,603,000,000 18,735,000,000 37,496 $1.79 1,999,000,000 19,922,000,000 36,766 $1.20 3,408,000,000 18,239,000,000 38,255 $1.19 2,740,000,000 18,112,000,000 41,831 $1.45 3,026,000,000 20,292,000,000 45,742 $1.67 3,112,000,000 21,762,000,000 50,018 $1.88 3,095,000,000 20,033,000,000 42,200 $1.78 3,082,000,000 20,336,000,000 42,600 $1.90 3,374,000,000 23,367,000,000 43,450 $2.11 3,503,000,000 24,042,000,000 41,500 $2.22 3,292,000,000 21,772,000,000 38,033 $2.06 3,126,000,000 21,450,000,000 41,800 $1.90 3,177,000,000 24,623,000,000 43,300 $2.08 3,193,000,000 25,422,000,000 41,400 $2.21 3,104,000,000 22,670,000,000 39,640 $2.50 3,098,000,000 22,280,000,000 43,000 $2.80 3,450,000,000 24,836,000,000 40,100 $3.86 3,390,000,000 24,746,000,000 43,500 $3.45 3,046,000,000 20,825,000,000 42,490 $2.93 Fuel Consumed 377,000,000 386,000,000 398,000,000 372,000,000 369,000,000 391,000,000 373,000,000 369,000,000 308,000,000 332,000,000 340,000,000 316,000,000 305,000,000 308,000,000 330,000,000 314,000,000 320,000,000 347,000,000 345,000,000 321,000,000 324,000,000 344,000,000 364,000,000 344,000,000 347,000,000 375,000,000 387,000,000 362,000,000 361,000,000 395,000,000 406,000,000 380,000,000 375,000,000 389,000,000 395,000,000 339,000,000