The second quarter earnings statements from three network carriers reflect the truism that regional do better in bad economic times. While Delta (DAL) reported increased contributions from its Connection partners, revenue contributed by American Eagle/Connection and Continental Express/Connection carriers were down from the year-ago period at Delta, Continental (CAL) and American (AMR), which reported their earnings last week. Continental’s regional fleet dropped over the last year, reducing available seat miles, which was duplicated at American Eagle/Connection carriers. Delta Connections made a $340 million more than they cost Delta, while Continental carriers made $133 million more than they cost. At least Delta and Continental regional partners contributed profits. American’s regional carriers lost $52 million during the quarters as costs rose by $22 million

Regionals Contributing More to DL
Delta Connection regional affiliates contributed $1.109 billion to Delta’s second quarter results when the fresh-from-bankruptcy airline earned $1.8 billion in net income. Excluding the reorganization and related items, net income was $274 million.
At the same time, contract carrier costs increased from $660 million in the year-ago quarter to $769 in the second quarter 2007. For the six months, regionals contributed $2.056 billion compared to $1.893 billion in the year-ago quarter. Costs, however, increased from $1.269 billion in the first half of 2006 to $1.486 billion in the current half.
Delta’s operating income for the June 2007 quarter was $490 million, the company’s fifth consecutive quarterly operating profit, reflecting an operating margin of 9.8 percent. Excluding reorganization and related items, operating income was $499 million, and operating margin was 10.0 percent.
Based on the most recent available DOT data for the year-to-date period ended May 31, 2007, Delta ranks first of the network carriers in on-time performance. In addition, exchange carrier data for the month of June 2007 indicates similar rankings through the end of the second quarter. Delta’s June 2007 quarter completion factor was 99.1 percent.

Continental Partners Contribute Almost A Fifth of Revenues
With 17 fewer regional aircraft, Continental Express and Connection carriers contributed $577 million to the mainline carrier’s $2.8 billion in second quarter revenues. Regional revenues were down 8.4 percent for the second quarter. Its regional capacity purchase agreements cost $444 million, down 2.2 percent for the quarter and $873 million for the year to date, up 0.5 percent. Regional revenue per available seat mile was down 2.7 percent as were ASMs by 5.8 percent from the second 2006 quarter.
In its highest second quarter profit since 2000, Continental posted net income of for Q2 of $228 million, up 13 percent over the year-ago period. The airline cited strong international growth, especially in the trans-Atlantic market.

AMR Regionals Down in Q2
American Eagle and Connection carriers contributed $658 million, down 6.3 percent, to the $5.879 billion in AMR’s second quarter revenues. AMR’s net income reached $319 million for the period compared to $291 million in the second quarter of 2006. Regional affiliates costs increased from $688 million in the year-ago quarter to $710 million. American's mainline passenger revenue per available seat mile (unit revenue) increased by 3.6 percent in the second quarter compared to the year-ago quarter. Regional affiliates flew 2.595 billion revenue passenger miles in the quarter, down 2.7 percent while available seat miles dropped 1.6 percent to 3.380 billion. Passenger load factor for the group dropped 0.8 points to 76.8 percent.
For the first half, regional affiliates earned $1.216 billion, down 4.3 percent, while expenses rose from $1.3 million in the year-ago period to $1.4 billion in the first half of 2007. Total operating revenues for AMR were $11.306 billion RPMs were down 1.7 percent to 4.85 billion while ASMs were down 0.6 percent to 6.65 billion. Load factor was down 0.9 points to 73 percent.