American Airlines 2006 Annual Report Download - page 41

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37
O
PERATING
E
XPENSES
2006 Compared to 2005 The Company’s total operating expenses increased 3.4 percent, or $702 million, to
$21.5 billion in 2006 compared to 2005. American’s mainline operating expenses per ASM in 2006 increased 3.8
percent compared to 2005 to 10.90 cents. This increase in operating expenses per ASM is due primarily to a 16.5
percent increase in American’s price per gallon of fuel (net of the impact of a fuel tax credit and fuel hedging) in
2006 relative to 2005.
(in millions)
Operating Expenses
Year ended
December 31,
2006
Change
from 2005
Percentage
Change
Wages, salaries and benefits $ 6,813 $ 58 0.9%
Aircraft fuel 6,402 787 14.0 (a)
Other rentals and landing fees 1,283 21 1.7
Depreciation and amortization 1,157 (7) (0.6)
Commissions, booking fees and credit
card expense
1,076
(37)
(3.3)
Maintenance, materials and repairs 971 (14) (1.4)
Aircraft rentals 606 15 2.5
Food service 508 1 0.2
Other operating expenses 2,687 (122) (4.3) (b)
Total operating expenses $ 21,503 $ 702 3.4%
(a) Aircraft fuel expense increased primarily due to a 16.5 percent increase in American’s price per
gallon of fuel (considering the benefit of a $55 million fuel excise tax refund received in March 2005
and the impact of fuel hedging) offset by a 2.3 percent decrease in American’s fuel consumption.
(b) Other operating expenses decreased due to charges taken in 2005. Included in 2005 expenses was
a $155 million charge for the retirement of 27 MD-80 aircraft, facilities charges of $56 million as part
of the Company’s restructuring initiatives and an $80 million charge for the termination of an airport
construction contract. These charges were somewhat offset by a $37 million gain related to the
resolution of a debt restructuring and a $22 million credit for the reversal of an insurance reserve.
The 2006 expenses were impacted by a $38 million increase in costs associated with third-party
maintenance contracts obtained by the Company’s maintenance and engineering group.