Compared to 2007 Combined

Operating Revenue

Northwest Operations. As a result of the Merger, our results of operations for 2008 include Northwest’s operations for the period from October 30 to December 31, 2008, increasing our operating revenue $2.0 billion. The addition of Northwest to our operations for that period increased available seat miles (“ASMs”), or capacity, 10% for the full year.

 

Mainline Passenger Revenue. Mainline passenger revenue increased primarily due to (1) the inclusion of Northwest’s operations, (2) fare increases in response to increased fuel charges, (3) pricing and scheduling initiatives and (4) our increased service to international destinations. The increase in passenger revenue reflects a rise of 6% and 7% in passenger mile yield and passenger revenue per available seat mile (“PRASM”), respectively.

	•	 	North American Passenger Revenue . North American passenger revenue increased 8%, driven by a 2.1 point increase in load factor and a 6% increase in PRASM on a 1% increase in capacity. The passenger mile yield increased 4%. The increases in passenger revenue and PRASM reflect (1) the inclusion of Northwest’s operations and (2) fare increases, higher yields and our reduction of domestic flights in response to high fuel prices and the slowing economy. Excluding Northwest’s operations, we reduced domestic capacity by 7% for the year.

 	•	 	International Passenger Revenue . International passenger revenue increased 38%, driven by a 27% increase in capacity due to growth in our international operations and the inclusion of Northwest’s operations, and a 9% increase in PRASM. The passenger mile yield increased 9%. These results reflect an increase in yields due to fuel surcharges and increases in service to international destinations, primarily in the Atlantic and Latin America markets, from the restructuring of our route network. Excluding Northwest’s operations, we increased international capacity by 14% for the year.

Regional carriers . Passenger revenue of regional affiliates increased due to the inclusion of Northwest’s operations. Excluding Northwest’s operations, regional carriers revenue declined $58 million primarily due to an 8% decrease in capacity in response to high fuel prices and the slowing economy, as well as the termination of certain contract carrier agreements.

Cargo . Cargo revenue increased due to the inclusion of Northwest’s operations and an increase in fuel surcharges, improved yields, and higher international volume.

Other, net . Other, net revenue increased primarily due to the inclusion of Northwest’s operations. Excluding Northwest’s operations, other, net revenue increased $485 million primarily due to (1) new or increased administrative service charges and baggage handling fees, (2) growth in  aircraft maintenance and staffing services to third parties and (3) higher SkyMiles program revenue.

Operating Expense

Northwest Operations. As a result of the Merger, 2008 includes Northwest’s operations for the period from October 30 to December 31, 2008, increasing operating expense $2.1 billion. The addition of Northwest for that period increased capacity 10% for the full year.