FURTHER GOOD news from the US airline industry included record profits at Continental Airlines and progress from United Airlines as it ends its first full year under employee ownership.
"This was a whopper year for us no matter how you measure it...we're back on the map and here to stay," says a bullish Gordon Bethune, Continental's president, revealing 1995 net profits of $224 million. It is Continental's first annual profit for half a decade, and the best ever in its history. In 1994, losses stood at $166 million.
The airline's recovery stems in part from the end of the low-cost Continental Lite experiment, which ceased operations nearly a year ago. The venture resulted in a cut-throat fares battle, between Continental and USAir on the East Coast. Both carriers saw yields climb by more than 13% in 1995, which more than offset an overall fall in traffic.
United also turned in a record performance for 1995, posting a pre-tax profit of $621 million. That came down to $349 million after taxes and debt repayments.
The 1994 employee share-ownership programme (ESOP), which gave workers a controlling stake in the group in return for wage concessions, allowed United to improve customer service and keep down costs, says chairman Gerald Greenwald.
While group revenues rose by almost $1 billion over the year, underlying costs grew by less than 2%, excluding $504 million paid under the ESOP scheme. Wage costs were down by $150 million.
"We anticipate continued success for 1996, having begun the year with strong first-quarter bookings," says Greenwald.
Source: Flight International