Airtran 2007 Annual Report Download - page 35

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29
2006 Compared to 2005
Summary
We reported operating income of $40.9 million, net income of $14.7 million and diluted earnings per common share of $0.16 for the
year ended December 31, 2006. For 2005 we reported operating income of $22.6 million, net income of $7.5 million, and diluted
earnings per common share of $0.08.
Operating Revenues
Our operating revenues for year ended December 31, 2006 increased $442.4 million (30.5 percent), primarily due to a 30.0 percent
increase in passenger revenues. The increase in passenger revenues was largely due to a 22.4 percent increase in passenger traffic as
measured by RPMs, and an increase in our average yield per RPM of 6.1 percent to 13.12 cents. The increase in yield resulted
primarily from a 7.8 percent increase in our average fare to $90.51. This increase in yield, when combined with our 0.7 percentage
point decrease in passenger load factor, resulted in a 5.1 percent increase in passenger unit revenues as measured by RASM to 9.55
cents.
During the year ended December 31, 2006, we took delivery of two B717 aircraft and 20 B737 aircraft. As a result, our capacity, as
measured by ASMs, increased 23.7 percent. The combination of our 23.7 percent increase in capacity and 22.4 percent increase in
traffic resulted in a 0.7 percentage point decrease in passenger load factor to 72.8 percent.
Operating Expenses
Our operating expenses for the year ended December 31, 2006 increased $424.2 million (29.7 percent) or 5.0 percent on a cost per
ASM basis. Our financial results were significantly affected by changes in the price of fuel.
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 expense per ASM, for the indicated periods:
Yea
r
ended
December 31, Percent
Increase
(Decrease)
2006 2005
Aircraft fuel ....................................................................................................................................
.
3.55¢ 3.01¢ 17.9%
Salaries, wages and benefits ............................................................................................................
.
2.05 2.14 (4.2)
Aircraft rent....................................................................................................................................
.
1.21 1.25 (3.2)
Maintenance, materials and repairs..................................................................................................
.
0.66 0.55 20.0
Landing fees and other rents............................................................................................................
.
0.53 0.53 —
Distribution.....................................................................................................................................
.
0.37 0.44 (15.9)
Marketing and advertising...............................................................................................................
.
0.24 0.24 —
Aircraft insurance and security services...........................................................................................
.
0.14 0.15 (6.7)
Depreciation ...................................................................................................................................
.
0.16 0.13 23.1
Other operating...............................................................................................................................
.
0.83 0.84 (1.2)
Total CASM..........................................................................................................................
.
9.74¢ 9.28¢ 5.0%
Aircraft fuel increased 17.9 percent on a cost per ASM basis, primarily due to escalating fuel prices. Our fuel price per gallon,
including all fees and taxes, increased 20.0 percent from $1.81 for the year ended December 31, 2005 to $2.17 for the year ended
December 31, 2006.
Salaries, wages and benefits decreased 4.2 percent on a cost per ASM basis, primarily due to gains in productivity driven by the
increased number of aircraft. We employed approximately 7,400 full-time equivalent employees as of December 31, 2006,
representing a 10.6 percent increase over the comparable date in 2005.
Maintenance, materials and repairs increased 20.0 percent on a cost per ASM basis. On a cost per block hour basis, maintenance
materials and repairs expense increased 21.1 percent to $322 per block hour primarily due to the expiration of warranties on the B717
aircraft and an increase in B717 engine maintenance contract rates. 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 maintenance, repair, and overhaul providers.