By James Pilcher
The Cincinnati Enquirer

Comair earned a net profit of $32.1 million and had an operating profit margin of 13.6 percent in the second quarter of this year, according to a new report by the federal Transportation Department.

This is the first time in years that such financial data has been made available on the Erlanger-based regional carrier, which was bought by Delta Air Lines in January 2000. Since then, Comair has kept financial data closely guarded, even during the 89-day pilot strike during the spring of 2001.

RESULTS FOR Q2

Financial results improved for Comair for the second quarter of this year, compared with first-quarter results (in parentheses): • Operating revenue: $248.1 million ($228 million). • Operating expenses: $214.2 million ($215.3 million). • Operating profit: $33.8 million ($12.7 million). • Operating profit margin: 13.6 percent (5.6 percent). • Net profit: $32.2 million ($6.2 million). • Cost per available seat mile: 11.2 cents (12.7 cents). Source: Department of Transportation Bureau of Transportation Statistics

In addition, Comair also had the lowest cost structure of the nation's seven largest regionals, according to the data, which the government began collecting late last year. It cost the airline 11.2 cents to fly one passenger one mile, the government said.

The data were released at a time when Comair is asking its pilots and flight attendants to renegotiate contracts, which could include pay cuts. The company is telling its workers that it needs to lower costs to stay competitive and to continue to grow.

But in an interview Friday, Delta Connection president and chief executive officer Fred Buttrell, who oversees Delta's network of regional flying, said that the profit and cost numbers don't tell the whole story.

He pointed out that the data are uaudited, and the cost figures for other airlines include those that fly turboprops. Comair operates all jets.

Buttrell also said that even though Comair's costs appear to be low compared with the other six large regional carriers, there are other regionals not on the government's list.

"Some of those smaller guys are banging on my door asking for more flying, and we've got to look at the bottom line here," said Buttrell. "The regional jet industry is restructuring and is going through consolidation. The market is driving this (request for contract renegotiation), not Delta.

In a memo to employees last Friday, Comair president Randy Rademacher said that the airline was hoping to secure new 70-seat jets that the company had planned on for next year. It also wants to get additional jets and routes.

The combination of these could mean a 50 percent growth in Comair's capacity by 2007, the memo said, adding that the decision on whether Comair would get the new flying would be made within the next month.

Buttrell said that the Delta network is in line to get 23 70-seat airplanes in 2004, and none after that. Delta Connection flying is assigned to individual carriers based on how cheaply each can fly each route, although it is not based on the normal industry standard of cents it costs to fly one seat one mile.

"There are 1,100 regional jets out there now, all competing for the same passengers and routes," Buttrell said.

Third-quarter 2003 numbers were not yet available, but Comair lost $5.1 million in fourth quarter 2002, and then turned a net profit of $6.2 million in the first quarter of this year.

The government report also stated that while Comair had a 13.6 percent operating profit margin during the last period, it only had a 5.6 percent margin in the first quarter and actually had a negative 1.7 percent margin in the fourth quarter of 2002.

Comair officials refused to provide such figures before or during the 89-day pilot strike during the spring of 2001, which was one of the longest in recent memory and cost Delta and Comair approximately $750 million. The strike resulted in the union signing a five-year contract in June 2001 that made the company's 1,800 pilots the highest-paid in the regional industry. One industry analyst, UBS's Robert Ashcroft, says in a recent research report that Comair's pilot labor costs are the second-highest among major regional carriers.

As part of their effort to convince its pilot and flight attendant unions to lower wages, Comair officials now say they will provide detailed financial data privately to each work group. Neither union is obligated to redo its contract.

Neither the Air Line Pilots Association nor the International Brotherhood of Teamsters has said it would hold such talks, saying they wanted to see that detailed financial data on the state of the company.

The Transportation Department numbers "are very compelling, but they may not tell the whole story, and we're waiting to see the more detailed information," said ALPA spokesman Brian Moynihan, a Comair regional jet captain from Fort Wright.

He said that about 300 pilots met to discuss the possibility with union leadership Thursday. Also at the meeting was Duane Woerth, the president of ALPA International, who apparently said that the Comair pilots have the national union's support.

The local trustee of the International Brotherhood of Teamsters, which represents Comair's 950 flight attendants, declined comment, but local representative Jacqueline Underwood said that the data were not a surprise.

"They are definitely more than modestly profitable," Underwood said. Flight attendants signed their five-year contract in July 2002.

E-mail jpilcher@enquirer.com