THE US AIR TRANSPORT Association (ATA) is urging caution as airlines begin reporting improved second-quarter earnings.

The ATA warns that the anticipated industry-wide $700 million quarterly profit is "a drop in the bucket" compared with the $13 billion in losses since 1990 and the $75 billion in capital expenditures needed over the next five years.

The ATA is concerned that the return to profitability will prompt the Government to impose the 4.3¢/gallon aviation-fuel tax, which was deferred at the recommendation of President Clinton's 1993 airline commission. The tax would impose $530 million in new costs which would "...hit the industry like a hammer", says the ATA.

American Airlines parent AMR posted second-quarter net earnings of $178 million, up 31% over the same period in 1994. The April hailstorm at the airline's Dallas/Fort Worth hub, which grounded almost 10% of its fleet, and residual effects of the American Eagle ATR 72 crash in October 1994, reduced AMR's net earnings by $23 million.

Northwest Airlines posted record second-quarter net earnings of almost $105 million, up 47% over the same period in 1994. The carrier cites significantly higher traffic and "strong overall pricing" for an almost 9% increase in revenues for the quarter.

Continental Airlines posted its highest quarterly profit ever and its first profitable six-month period in ten years. Operating profits of $110 million represent a $151 million improvement over the second quarter of 1994, when the carrier recorded a $49 million loss on similar revenues.

America West Airlines also posted a record quarter, with net earnings of almost $21 million and an operating income of $53 million.

Reporting airlines cited higher traffic and load factors and, almost unanimously, higher yields.

Source: Flight International