Originally Posted by alfaromeo

Operating income is all income created by flying planes around. Operating expense is what it costs to fly planes around. Operating profit/loss is the difference between the two.

Overall profit/loss is the operating profit/loss adjusted for interest expense, taxes, and special charges.

In this quarter we had about $7.5 b in operating income and about $7.3 b in operating expense. That gave us a $200 mm operating profit. That operating expense included the one time charges for merger expenses and the early retirement costs as they are both operating expenses.

We had about $315 mm in net interest expenses and about $80 mm in the one time write down on debt. That gives us about a $180 mm loss before taxes. We about a $20 mm rebate from taxes (don't ask me how) and the net loss was $160 mm or so.

Note that borrowing money changes your cash balance but does not affect profit/loss except for the interest charges. Paying back debt does not affect profit/loss except for reducing interest charges.

Since borrowing or paying down debt doesn't affect profit/loss, you can develop different numbers for carriers based on their aircraft ownership. That is why you see people talk about EBITDAR which is earnings before Interest, Taxes, Depreciation, Amortization, and Rent. This eliminates differences in aircraft ownership costs (owned outright, owned but mortgaged, capital lease, operating lease) and allows carriers to be compared on an equal basis.