Oh, dear. The 100 largest airlines in the world once again have failed to turn a net profit. It was a close call, but this is the fifth consecutive annual net loss for the carriers in the Airline Business 100.
Last year was, of course, a big improvement. The collective net loss was only a marginal $177 million - nothing compared with the $14 billion of net losses between 1990 and 1993. And the best news of all is that last year's operating profit was almost $11 billion, more than double the operating profit achieved in 1993 and the highest operating profit ever recorded by the Airline Business 100 carriers. Clearly non-operating items such as interest payments and restructuring charges continue to take their toll on profits, but at least the industry's underlying operating performance has improved considerably.
The airline industry's total loss for 1994 is almost certainly more than the $177 million. Eight carriers out of the 100 have not reported net results, and as a group they probably lost money. Among the eight, only Britannia Airways and Virgin Atlantic are known to have been profitable. EVA Air lost money on a net basis due to the cost of its rapid expansion; the amount has not been reported but is believed to be considerably less than 1993's net loss of $84 million. Olympic lost money but has not yet reported. Avianca reported a nine-month loss. Saudia and Kuwait Airways probably lost money. Hapag Lloyd's financial performance is unknown.
Growth was a significant factor in 1994. The Airline Business 100 is 8.2 per cent larger in terms of passenger traffic and its freight traffic is 16.3 per cent bigger. However, the group's revenues grew by only 7.1 per cent. Whilst lower yields play their part in this, some carriers' revenues fell due to the sale of non-airline assets. Furthermore, a small part of these increases arises from the inclusion this year of a new large carrier, EVA Air, whose average yields are slightly below the industry average.
The Airline Business 100 carriers' collective fleet remained essentially static at just under 9,500 aircraft, and employee numbers fell only slightly to just over 1.5 million. While almost every airline claims to be cutting back on employee numbers, the industrywide employment figure remains higher than at any time since 1989. Nevertheless, the 100 airlines increased their revenue per employee by 7.8 per cent to nearly $163,000 - a very healthy sign.
The group of top profit makers remain the same, led of course by Singapore Airlines, but this year's Airline Business 100 contains some impressive turnround stories. Eight of the top 20 profit makers in 1994 turned round from net losses the previous year. Brazil's Vasp takes the accolades for highest net margin, best improvement in net margin and fastest sales growth.
Of the 92 carriers reporting net figures for 1994, only 30 suffered losses. However, between them these 30 lost almost $5.5 billion, dragging down the industry's collective result. Most of the red ink was spilled by a dozen troubled carriers.
This year's Airline Business survey of airline financial performance has been expanded considerably. EVA Air has at last released its revenue data, giving it a ranking of 63. The Copenhagen-based charter carrier Premiair, formed from the merger of Conair and Scanair, joins the Airline Business 100 for the first time at number 94, and Cargolux rejoins at number 99.
In addition to the main listing of 100 carriers, the response from medium-sized carriers in the $100-300 million revenue range has been sufficiently good for us to rank a further 50 airlines. Last year these 50 mid-sized carriers made a collective net profit of $69.4 million on revenues of $10.4 billion, after losing $132 million in 1993. The survey also includes a further 25 carriers which are smaller or have not released revenue data.
This survey contains six pages of data for the Airline Business 100 and 75 smaller carriers, followed by an alphabetical list of airlines; financial and traffic tables with commentary; regional breakdowns; and a page of notes and definitions.
This year's Airline Business 100 has only three new entrants. EVA Air's revenue of $738 million, up 89 per cent on 1993, gives it a place at number 63. Copenhagen-based charter carrier Premiair enters at number 94. And Cargolux's 27 per cent sales growth places it at number 99.
These three replace TAT, Viasa and Oregon-based Evergreen International Airlines. Along with Deutsche BA, TAT has now been consolidated into British Airways' accounts. Viasa failed for the second year running to provide any financial information, and it was unrealistic to attempt a revenue estimate again. Evergreen's revenue fell substantially.
The three Japanese airlines move up a little because of the strength of the yen, and SAS slips five places because of the sale of non-airline subsidiaries. Asiana enters the top 50 for the first time, moving from 62nd to 49th on the back of sales growth of 61.2 per cent. Vasp more than doubled its revenues as a result of international expansion, taking it up from 86 to 59. Air Afrique, Air Algerie and Iran Air move down due to currency devaluations.
Four airlines in the top 100 - Saudia, Virgin Atlantic, Avianca and Kuwait Airways - did not provide financial data, and Airline Business has estimated their revenues based upon traffic, currency fluctuations and market conditions.
As well as the Airline Business 100 itself, this year's survey includes 75 additional carriers. Fifty of these are given rankings, including several carriers which have never reported financial data to Airline Business before - such as Middle East Airlines, Ladeco, Vietnam Airlines and St Petersburg-based Aviation Enterprise Pulkovo. Revenues for Sempati Air and Kenya Airways are estimated by Airline Business.
Source: Airline Business