ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Background 2019 Financial Overview AAG’s 2019 Results Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our airline operates an average of 6,800 flights per day to more than 365 destinations in 61 countries through our hubs and gateways in Charlotte, Chicago, Dallas/Fort Worth, London Heathrow, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. In 2019, approximately 215 million passengers boarded our flights. The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of this report and should be read in conjunction with those financial statements and the related notes thereto. Pre-tax income and net income were $2.3 billion and $1.7 billion in 2019, respectively. This compares to 2018 pre-tax income and net income of $1.9 billion and $1.4 billion, respectively. Excluding the effects of pre-tax net special items, pre-tax income was $2.9 billion and $2.8 billion in 2019 and 2018, respectively. The year-over-year increase in our pre-tax income on both a GAAP basis and excluding pre-tax net special items was principally driven by higher revenues and lower fuel costs, offset in part by increases in salaries, wages and benefits, maintenance expenses and costs associated with increased regional capacity. $^{(1)}$  See Part II, Item 6. Selected Consolidated Financial Data –  “Reconciliation of GAAP to Non-GAAP Financial Measures”  and Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of net special items. Pre-Tax Income and Net Income 49 Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2019 2018 (In millions, except percentage changes) Passenger revenue $ 42,010 $ 40,676 $ 1,334 3.3 Cargo revenue 863 1,013 (150) (14.8) Other operating revenue 2,895 2,852 43 1.5 Total operating revenues 45,768 44,541 1,227 2.8 Mainline and regional aircraft fuel and related taxes 9,395 9,896 (501 ) (5.1 ) Salaries, wages and benefits 12,609 12,251 358 2.9 Total operating expenses 42,703 41,885 818 2.0 Operating income 3,065 2,656 409 15.4 Pre-tax income 2,256 1,884 372 19.7 Income tax provision 570 472 98 20.7 Net income 1,686 1,412 274 19.4 Pre-tax income – GAAP $ 2,256 $ 1,884 $ 372 19.7 Adjusted for: Pre-tax net special items  (1) 644 906 (262) (28.9) Pre-tax income excluding net special items $ 2,900 $ 2,790 $ 110 3.9