Airtran 2005 Annual Report Download - page 15

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In general, our operating expenses are significantly affected by changes in our capacity, as measured by ASMs. The following table presents our unit costs, defined as operating expenses per ASM, for the
indicated periods:
Twelve months ended
December 31, Percent
2005 2004 change
Aircraft fuel 3.08¢ 2.07¢ 48.8%
Salaries, wages and benefits 2.14 2.28 (6.1)
Aircraft rent 1.25 1.26 (0.8)
Maintenance, materials and repairs 0.66 0.58 13.8
Landing fees and other rents 0.53 0.52 1.9
Distribution 0.44 0.42 4.8
Marketing and advertising 0.24 0.23 (4.3)
Aircraft insurance and security services 0.15 0.19 (21.1)
Depreciation 0.13 0.12 8.3
Other operating 0.73 0.75 (2.7)
Total CASM 9.35¢ 8.42¢ 11.0%
Aircraft fuel increased 48.8 percent on an ASM basis, primarily due to escalating fuel prices. Our fuel price per gallon, including all fees and taxes, increased 53.6 percent from $1.20 for the twelve months ended
December 31, 2004 to $1.85 for twelve months ended December 31, 2005. The level of our flight operations, as measured by block hours flown, increased 23.3 percent while our fuel consumption per block hour
increased slightly 0.6 percent to 667 gallons. In a continued effort to reduce our fuel costs, we have begun adding winglets to our B737 aircraft as they are delivered. These enhancements extend the aircraft range,
improve performance and reduce fuel costs.
Salaries, wages and benefits decreased 6.1 percent on an ASM basis, primarily due to gains in productivity driven by the increased number of aircraft and higher daily utilization. We employed approximately 6,700
full-time equivalent employees, as of December 31, 2005, representing a 13.5 percent increase over the comparative period in 2004.
Maintenance, materials and repairs increased 13.8 percent on an ASM basis. On a block hour basis, maintenance costs increased 18.8 percent to $266 per block hour due to the expiration of warranties on the
B717 aircraft and an increase in airframe checks. As the original manufacturer warranties expire on our B717 and B737 aircraft, the maintenance, repair and overhaul of aircraft engines and a significant number
of aircraft systems become covered by maintenance agreements with FAA-approved contractors. Under our maintenance agreements, we pay monthly charges based on either the number of flight hours flown or the
number of landings.
Aircraft insurance and security services decreased 21.1 percent on an ASM basis. While the addition of 18 new Boeing aircraft to our fleet for the twelve-month period ending December 31, 2005 increased our total
insured hull value and related insurance premiums, the decrease on an ASM basis is primarily due to a reduction in hull and liability insurance rates and security costs for our 2005 fleet coverage.
Depreciation increased 8.3 percent on an ASM basis, primarily due to the addition of three B737 aircraft for the twelve-month period ending December 31, 2005 as well as, the purchase of spare aircraft parts for the
new B737 fleet. With the exception of the three B737s, all aircraft additions during the year were lease financed rather than purchased.
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