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Monday, January 17, 2005

Mesa, ExpressJet Are Top Regional Carriers In 2004

Spurred on by a new contract with United Airlines [UALAQ], Mesa Air Group [MESA] last year was the fastest growing regional carrier based on an analysis of year-end traffic data by Regional Aviation News. The traffic reports for 16 carriers were examined.

While it continues to only fly for Continental Airlines [CAL], ExpressJet [XJT] was the top regional carrier in 2004 as measured by total revenue passenger miles (RPMs) flown. Its fleet of 245 Embraers [ERJ] flew 7.4 billion RPMs in 2004 - a 28.6 percent increase over 2003.

American Eagle, a unit of American Airlines [AMR], was the second busiest carrier last year as it flew 6.4 billion RPMs. Its traffic was up 32.7 percent over 2003 levels.

Throughout much of the year, Mesa reported month-over-month growth in traffic as measured by RPMs in the 80 percent range. While its growth moderated slightly in the last several months, Mesa's RPMs grew by 69.9 percent over its 2003 traffic. Last year, Mesa returned to the United Express family and it dropped its code-share pact with Frontier Airlines [FRNT]. Mesa's fleet now includes 25 86-passenger Bombardier [BBD] CRJ 900s flying United's colors.

The second fastest growing regional carrier had a different story to tell. The three company-owed regional units of US Airways [UAIRQ] increased their traffic by 61.8 percent over 2003 traffic levels. As US Airways restructured its routes - first to avoid its second bankruptcy and then again while in bankruptcy - more and more flying was consigned to the regional carriers, both the company owned units and code-share partners.

2004's Top Regionals Ranked By Total RPMs
Rank Carrier Miles
1
 ExpressJet
7.4B
2
 American Eagle
6.4B
3
 Comair
6.2B
4
 SkyWest
5.5B
5
 Mesa
5.4B
6
 ASA
4.7B
7
 Republic Airways
2.95B
8
 Air Wisconsin
2.9B
9
 Pinnacle
2.8B
10
 FlyI
2.6B
11
 Horizon Air
2.15B
12
 US Airways Express
2.1B
13
 Mesaba
1.9B
14
 Jazz
1.6B
15
 Midwest Connect
203M
16
 Chicago Express
188M
Total accumulated revenue passenger miles on scheduled service. Source: Company reports

2004's Fastest Growing Regional Carriers Ranked By RPMs Growth
Rank Carrier %
1
 Mesa
69.9%
2
 US Airways Express
61.8%
3
 Pinnacle
61%
4
 Republic Airways
33.1%
5
 American Eagle
32.7%
6
 Air Wisconsin
31.5%
7
 Horizon Air
31.4%
8
 SkyWest
31.3%
9
 ExpressJet
28.6%
10
 Comair
19.9%
11
 ASA
18.9%
12
 Mesaba
7.3%
13
 Jazz
4.9%
14
 Midwest Connect
0
15
 Chicago Express
(1.6%)
Ranked by the 2004 growth in revenue passenger miles over 2003. Source: Company reports

Air Wisconsin {United Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 247.4M 205M 20.7% 2.9B 2.2B 31.5%
UP | UP ASM (miles) 343.9M 283.7M 21.2% 3.8B 2.9B 30.7%
DN | UP Load Factor 71.9% 72.3% (0.4 points) 75.2% 74.7% 0.5 points
UP | UP Passengers Enplaned 616,349 553,008 11.5% 7.1M 5.8M 22%
Analysis: December was the slowest month for growth in all of 2004 at Air Wisconsin as measured by both traffic and capacity. The privately held carried reported greater dips in its load factors in February and May. Overall in 2004, Air Wisconsin grew at a slightly slower pace than it did in 2003. Last summer, it dropped its code-share partnership with AirTran and it now devotes its entire fleet to ferrying United passengers.

Chicago Express (Unit of ATA Holdings [ATAHQ]) {ATA Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
DN | DN RPM (miles) 14.5M 16.4M (11.9%) 188.5M 191.7M (1.6%)
DN | DN ASM (miles) 23M 26.9M (14.2%) 302.9M 310.2M (2.3%)
UP | UP Load Factor 62.9% 61.2% 1.7 points 62.2% 61.8% 0.4 points
DN | UP Passengers Enplaned 88,004 93,185 (5.6%) 1.1M 1M 1.6%
Analysis: Operating for its second full month in bankruptcy, Chicago Express posted its worst month-over-month performance in December when it fell in all traffic measurements, except load factor. December represented the lull before the storm as Chicago Express in January is reducing its flights into Chicago Midway and adding service into Indianapolis. For the year, Chicago Express flew fewer seats and miles than it did in 2003. The one bright spot was a slight improvement in its load share factor.

Horizon Air (Unit of Alaska Air Group [ALK]) {Alaska Air, Frontier Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 201M 143.1M 40.5% 2.1B 1.6B 31.4%
UP | UP ASM (miles) 270.5M 207.8M 30.2% 3.1B 2.5B 20.9%
UP | UP Load Factor 74.3% 68.9% 5.4 points 69.4% 63.9% 5.5 points
UP | UP Passengers Enplaned 548,200 430,900 27.2% 5.9M 4.9M 20.4%
Analysis: Horizon Air in December posted its best month-over-month improvements for 2004. The pace that began in September continued to accelerate through December. Last year marked the first year that Horizon provider feeder service to Frontier Airlines' hub in Denver.

Jazz (Unit of Air Canada [ACE]) {Air Canada}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 137M 129M 6.2% 1.68B 1.6B 4.9%
DN | DN ASM (miles) 201M 217M (7.4%) 2.61B 2.69B (2.8%)
UP | UP Load Factor 68.2% 59.4% 8.8 points 64.3% 59.6% 4.7 points
Analysis: Jazz, the regional unit of Air Canada, focused its efforts on flying the right number of seats for its modest increase in traffic. While capacity decreased in December, it improved its loads by 8.8 points. Its totals for 2004 reflects a similar pattern. The fourth quarter is the first three-month period the carrier has operated outside of bankruptcy since the first quarter of 2003.

Mesaba Aviation (Unit of MAIR Holdings [MAIR]) {Northwest Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 170.4M 156.3M 9% 1.9B 1.7B 7.3%
UP | UP ASM (miles) 267.6M 245.2M 9.1% 2.96B 2.93B 0.7%
-- | UP Load Factor 63.7% 63.7% no change 64.3% 60.4% 3.9 points
DN | DN Passengers Enplaned 464,126 482,852 (3.9%) 5.4M 5.6M (4.7%)
Analysis: In December, Mesaba reversed the slow month-over-month growth it posted in November. The December pace returned to the level of growth the carrier experienced in October. When 2004 began, Mesaba was bracing for a pilots strike. While the strike was avoided at the last minute, Northwest pulled some RJ flying from Mesaba and its numbers from 2004 reflect a slower rate of growth than what was posted for 2003.

Midwest Connect (Unit of Midwest Air Group [MEH]) {Midwest Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
DN | -- RPM (miles) 16.6M 14.9M 11.4% 203.8M 203.8M no change
UP | DN ASM (miles) 30.7M 27.4M 12.1% 362.5M 382.2 (5.2%)
DN | UP Load Factor 54.2% 54.6% (0.4 points) 56.2% 53.3% 2.9 points
UP | UP O&D Passengers 55,158 51,305 7.5% 680,233 604,354 12.6%
UP | UP Revenue Yield 34.61 cents 33.51 cents 3.3% 36.80 cents 33.28 cents 10.6%
UP | UP Revenue per ASM 19.34 cents 18.88 cents 2.4% 21.25 cents 18.21 cents 16.7%
UP | UP Number of Flights 4,774 4,318 10.6% 56,599 54,863 3.2%
Analysis: The rate of month-over-month growth for traffic and capacity slowed in December for Midwest Connect. The carrier established new records in November. Midwest Connect discloses more about its monthly performance than any other carrier. For the second year in a row, Midwest Connect reported flying fewer seats than in the previous year. While the carrier posted a modest increase in traffic in 2003 over 2002, in 2004 traffic growth remained flat.

Pinnacle Airlines [PNCL] {Northwest Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 267.9M 192M 39.5% 2.8B 1.7B 61%
UP | UP ASM (miles) 416.8M 276.2M 50.9% 4.2B 2.6B 57.5%
DN | UP Load Factor 64.3% 69.5% (5.2 points) 68.6% 67.1% 1.5 points
UP | UP Passengers Enplaned 550,107 458,878 19.9% 6.3M 4.5M 39.6%
Analysis: Completing its first full year as a public company, in December Pinnacle reported its slowest level of growth for the year. It also reported its lowest load factor in December. In 2004, Pinnacle added 41 50-seat jets to bring its fleet to 117.

Republic Airways [RJET] {American Airlines, Delta Air Lines, United Airlines, US Airways}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 294.6M 225.1M 30.9% 2.9B 2.2B 33.1%
UP | UP ASM (miles) 439.4M 336M 30.8% 4.4B 3.4B 27.7%
UP | UP Load Factor 67.1% 67% 0.1 points 66.7% 64.1% 2.7 points
UP | UP Passengers Enplaned 620,790 441,746 40.5% 6.2M 4.6M 35.5%
Analysis: December was the best month for Republic since last June. Its 30.8 percent capacity growth was the best month-over-month improvement for the year. Republic's four code-share partners pay it based on capacity-buy contracts.. Republic went public in May and did not issue traffic reports for those months in 2004 when it was a private company. Its fleet of 111 RJs includes 11 Embraer 170s - it remains the only independent carrier in the U.S. flying this new RJ.

SkyWest Airlines [SKYW] {Continental Airlines, Delta Air Lines, United Airlines}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 512.9M 400.5M 28.1% 5.5B 4.2B 31.3%
UP | UP ASM (miles) 704M 550M 28% 7.5B 5.8B 28.4%
UP | UP Load Factor 72.(% 72.8% 0.1 points 73.5% 71.9% 1.6 points
UP | UP Passengers Enplaned 1.2M 1M 18.8% 13.4M 10.7M 25%
Analysis: With its 28 percent capacity growth in December, SkyWest should beat by more than 1 percent the fourth quarter capacity growth that a Raymond James analyst had predicted. Otherwise, its December growth was slowest growth in traffic since June. Although SkyWest expanded its United Express relationship with additional flying, the regional carrier grew at a slower pace in 2004 compared to its growth rate in 2003 over 2002 levels.

US Airways Express (Unit of US Airways [UAIRQ]) {Midatlantic Airlines, Piedmont Airlines, PSA}
December Trend | 2003-2004 Trend December 2004 December 2003 Percent Change 2004 2003 Percent Change
UP | UP RPM (miles) 237.6M 109.2M 117.5% 2.1B 1.2B 61.8%
UP | UP ASM (miles) 383.6M 192.9M 98.9% 3.4B 2.4B 40.7%
UP | UP Load Factor 61.9% 56.6% 5.3 points 61.4% 53.4% 8 points
UP | UP Passengers Enplaned 664,578 481,219 38.1% 7.1M 5.8M 21.5%
Analysis: After posting triple-digit growth in traffic in the November-over-November reports, US Airways Express carriers reported a fractionally better December in both traffic and capacity growth to again set new records. A year makes a world of difference for US Airways Express. Although the company is again operating in bankruptcy, it set new growth records in 2004 compared to an overall reduction in both RPMs and ASMs reported in 2003.

Independence Air [FLYI]
December Trend | November Trend December 2004 % Change since 11/04 November 2004 October 2004 Fourth Quarter Consolidated 2004 Consolidated
UP | UP RPM (miles) 189.8M 3.71% 183M 181.1M 587.8M 2.6B
DN | UP ASM (miles) 347.1M (1.44%) 352.2M 343M 1B 4.3B
UP | DN Load Factor 54.7% 2.7 points 52% 52.8% 54% 61.7%
UP | DN Passengers Enplaned 478,653 0.25% 477,424 498,303 1.5M 7M
Analysis: December was the first and only month in 2004 that Flyi did not operate with a code-share partner and it also marked the first complete month that Independence Air flew its new Airbus 319s. November included one-day of flights for Delta Air Lines. Although the Independence Air load factors continue to be disappointing, it was 0.3 points better than the load factor posted in December by Midwest Connect. Flyi's consolidated 2004 tally includes Independence, Delta and United Express flights.

( ) Indicates corporate affiliation. { } indicates code-share partnerships. Sources: Company reports, Raymond James

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