FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1997
1997 - 1204.PDF
AIR TRANSPORT ANALYSIS US carriers enjoy profits hike KEVIN O'TOOLE/LONDON OVERALL PROFITS from the major US airline groups continued to forge ahead in the first quarter of 1997, shrugging aside the hike in fuel costs and re-imposition of the 10% federal ticket tax in early March. The leading airlines made a combined profit of over $750 mil lion, more than doubling the total of a year ago in one of die industry's traditionally weak quarters. Two years ago, die airlines lost close to $500 million in the first quarter. The profits are helped by a buoyant US passenger market tJiat shows few signs of tailing off. Average traffic growth year-on- year remained above 7%, continu ing the boom seen at the end of 1996: die largely domestic opera tions of America West, US Airways and Southwest Airlines showed die biggest gains. With capacity growth still restrained, load factors again rose to reach 68.6%. Airlines are relatively upbeat over the prospects for a further, although more modest, improve ment in the second quarter, as the US market remains strong. Southwest chairman Herb Kelleher added his superlatives to the "splendid" first-quarter per formance, but warned the re- imposition of the ticket tax could affect second-quarter revenues. Northwest Airlines says it expects little improvement in fuel prices or in the weakness of the yen, which has depressed transpacific fares. Northwest's growth will also be hampered by late delivery of five new widebodied aircraft. II.W MM-JM'lV^uMtm! :^<.:i>:':i.3;l^Vi United Airlines Traffic (RPK) (millions) change 45.324 5.4% Capacity (ASK) (millions) change 64.868 3.6% Load factor (%) change 69.9% 1.2 Passenger yield Seat costs c/RPK change c/ASK change 7.96 4.7% 5.76 3.2% American Airlines Delta Air Lines Northwest Airlines Continental Airlines US Airways Southwest Airlines Trans World Airlines America West TOTALS 40.700 37.327 26,697 17.524 15.929 10.512 9,128 6,407 209.548 2.7% 10.6% 6.5% 11.7% 13.7% 11.9% -3.0% 13.7% 7.1% 60.370 54.204 37,095 25.474 23,300 16.923 13,770 9,317 305,321 -0.1% 6.5% 3.9% 8.8% 7.3% 9.1% -6.9% 16.9% 4.2% 67.4% 68.9% 72.0% 68.8% 68.4% 62.1% 66.3% 68.8% 68.6% 1.8 2.6 1.8 1.8 3.8 1.6 2.7 -1.9 1.9 8.33 6.31 7.64 8.40 11.01 8.08 7.36 6.80 7.92 0.4% 8.3% -1.0% 1.7% -0.6% 2.4% 2.2% -1.2% 2.4% 5.84 5.57 5.60 5.76 7.68 4.73 6.13 4.60 5.80 4.8% 1.5% 1.1% 3.9% -3.6% 2.6% 11.8% -3.3% 2.5% NOTES: Seat costs exclude the Impact of Employee Share Ownership Programmes, restructuringcharges and fuel taxes. RPK= Revenue Passenger Kilometres ASK= Available Passenger Kilometres lmile= 1.609km. Change represents increase/decrease on the same quarter a year earlier. Yields also continued to rise in the first quarter, although costs too have been edging up, largely due to the hike in fuel prices, which are up byaround20% after the mid-1996 rise. Underlying seat costs have largely been stable. Despite profits elsewhere, Trans World Airways (TWA) continues to struggle, turning in a net loss of $72 million. The carrier's cash bal ances ended March at less than $137 million, raising further con cerns over its future. The result, however, marks a big improvement on the huge losses recorded at the end of 1996 and chairman Gerald Gitner says the airline ended the first quarter ahead of plan. TWA's traffic was down as the airline tackled the replacement of its ageing widebody fleet with smaller and more efficient Boeing 767 and 757 aircraft. Part of the narrowbody fleet was also taken out for early maintenance to ensure capacity in the peak travel season. Cost reduction and improved schedule reliability are the main focus, says Gitner. Some of the shine was also taken off the results at American Airlines •iffllliffliliWliMfj.1 AMR/American Airlines America West Continental Airlines Delta Air Lines Northwest Airlines Southwest Airlines Trans World Airlines UAL/United Airlines US Airways Group TOTAL :«i4:!UJhlrJ£WiKlfclAI 1996 Ql Q2 157 293 14 28 88 167 63 161 53 203 33 85 -37 25 6 337 -55 201 322 1.501 Q3 282 -46 18 238 254 61 26 340 68 1,241 Q4 284 12 47 125 26 28 -259 19 50 332 NOTE: Net profit/loss for whole airline group including subsidiaries and non-flight operations 1997 Ql 152 14 74 221 65 51 -72 105 144 753 and US Airways (formerly USAir) by tense labour negotiations. Bob Crandall, chairman of American's parent AMR group, admits that net profit, which took a slight dip in the quarter, would have been "dramatically better" but for the dispute with pilots. The group also put aside $20 million to cover the discount share options on offer to pilots as part of the settlement. US Airways chairman Stephen Wolf continued to exert pressure to cut costs at the airline, warning that despite record results, losses persist in key markets. He says that while the carrier wants to become a "major international competitor", if cost structures cannot be reduced "the other path leads to the compa ny becoming a smaller, regional carrier". Elsewhere, the star performance came from Delta, which turned in net profits of $2 21 million despite a $53 million charge to carry out realignment of its transatlantic operation - one of the last elements of its restructuring. Chairman Ron Allen pledges to keep Delta as "the low cost network carrier", although the "7.5 programme", designed to push seat costs below c4.7 per available kilometre (c7.5 per mile), was abandoned last year. Continental produced another strong performance and continues to shore up its finances. In April the carrier secured a $160 million credit facility to fund pre-delivery payments for its new Boeing air craft orders and sealed a $190 mil lion bond issue to expand its hub in Houston, Texas. Continental, which proved its skill in hedging by anticipating the fuel price rise last year, says it locked in close to $1 billion in financing ahead of the rise in US interest rates. How much longer the traffic boom continues depends on the US economy, which has had an unprecedented spell of growth and is still rising at around 5% on latest figures. Economics dictates that it must eventually slow, but when? J Validefs comeback WHILE US network carri ers thrive on buoyant mar kets, once-unstoppable low- cost rival Valujet is still fight ing to come back from the Florida crash a year ago and its subsequent grounding. The airline has completed its first full quarter since re turning to the air in October, and its comeback appears to be gathering pace. Net results for the March quarter show a loss of $18.5 million, which would have been worse but for aircraft sales and tax benefits, but chair man Robert Priddy believes that there is a "positive mo mentum", with load factors rising to around 54%, four points down on a year ago. Passenger numbers and revenues are only one-third of the former levels before the crash, but rising. With two more routes to be re opened on 15 May, the airline will serve 24 cities with 172 peak-time departures. At its height, Valujet had 31 desti nations and 320 peak flights. 16 FLIGHT INTERNATIONAL 7 - 13 May 1997
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
