Midwest Air Group, Inc. (Amex: MEH - News) today reported fourth quarter results for its Midwest Airlines and Skyway Airlines (dba Midwest Connect) operations.
"The competitive environment and high fuel prices continued to challenge us in the fourth quarter, as they have throughout a difficult year," said Timothy E. Hoeksema, chairman and chief executive officer. "Although disappointing from an earnings perspective, the quarter included numerous bright spots. We significantly increased revenue while lowering non-fuel costs, posted impressive gains in market share, and ended the year in a strong cash position."
Comparing fourth quarter 2005 to fourth quarter 2004, operating revenue increased 37.8% to $142.8 million. Operating results improved to a $14.0 million loss from a $19.2 million loss in the fourth quarter of 2004, while net results improved to a $13.8 million loss from a $19.4 million loss. (Due to accumulated losses, Midwest Air Group discontinued recording federal income tax benefit on losses beginning with second quarter 2004 and state income tax benefit on losses beginning with second quarter 2005.) Per share results were a loss of $0.79, compared with a $1.11 loss in the same quarter a year earlier.
The revenue increase reflects a 40.2% increase in passenger traffic, due to strong customer demand in response to strategic pricing actions and schedule and service enhancements. A 1.2% increase in revenue yield was driven primarily by the improving industry pricing environment. Total operating expenses increased 27.6%, due to increases in fuel expense, station costs and aircraft rental expenses. Fuel expense increased $23.4 million, or 75.7% -- of which $12.9 million ($0.74 per share) was related to price increases (calculated by applying 2004 prices to actual gallons consumed in 2005 and comparing the result to actual 2005 expense). The company also recorded $1.0 million ($0.06 per share) for the write-off of aircraft purchase deposits. Fuel expense includes the effect of hedging, which favorably impacted fuel costs by $2.1 million ($0.08 per gallon) in the quarter.
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"The competitive environment and high fuel prices continued to challenge us in the fourth quarter, as they have throughout a difficult year," said Timothy E. Hoeksema, chairman and chief executive officer. "Although disappointing from an earnings perspective, the quarter included numerous bright spots. We significantly increased revenue while lowering non-fuel costs, posted impressive gains in market share, and ended the year in a strong cash position."
Comparing fourth quarter 2005 to fourth quarter 2004, operating revenue increased 37.8% to $142.8 million. Operating results improved to a $14.0 million loss from a $19.2 million loss in the fourth quarter of 2004, while net results improved to a $13.8 million loss from a $19.4 million loss. (Due to accumulated losses, Midwest Air Group discontinued recording federal income tax benefit on losses beginning with second quarter 2004 and state income tax benefit on losses beginning with second quarter 2005.) Per share results were a loss of $0.79, compared with a $1.11 loss in the same quarter a year earlier.
The revenue increase reflects a 40.2% increase in passenger traffic, due to strong customer demand in response to strategic pricing actions and schedule and service enhancements. A 1.2% increase in revenue yield was driven primarily by the improving industry pricing environment. Total operating expenses increased 27.6%, due to increases in fuel expense, station costs and aircraft rental expenses. Fuel expense increased $23.4 million, or 75.7% -- of which $12.9 million ($0.74 per share) was related to price increases (calculated by applying 2004 prices to actual gallons consumed in 2005 and comparing the result to actual 2005 expense). The company also recorded $1.0 million ($0.06 per share) for the write-off of aircraft purchase deposits. Fuel expense includes the effect of hedging, which favorably impacted fuel costs by $2.1 million ($0.08 per gallon) in the quarter.
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