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US Regionals Feeling the Squeeze

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Well-known member
Dec 21, 2003
Don't know if it's been posted already, but an interesting article....


first two paragraphs:

Contracts between regional carriers and US majors that ushered in the regional jet era late in the last decade are due to expire from next year, with the majority terminating in 2012-19. Attempting to predict the outcome of those negotiations, or if existing partnerships will survive, is akin to looking into a foggy crystal ball. But one thing is certain - the sometimes higher margins regional carriers enjoyed over their major partners in some of those contracts will fade into history as US network carriers demand financial returns of regional carriers that more closely match their own.

A quick snapshot of annual operating margins from Morningstar Research for the largest publicly traded US regionals early in the decade show Pinnacle Airlines, Republic Airways Holdings and SkyWest posting margins of 14%, 18.5% and 12.2% in 2003. That contrasts with annual operating margins at Delta, United and US Airways for the same year of negative 5.9%, negative 9.9% and negative 3.7%. Subsequent downcyles have caused regional operating margins to fall, but only two publicly traded regional carriers, Mesa and ExpressJet, have produced periodic negative annual operating margins since 2003.

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