LATEST RESULTS coming in from the major US airlines point towards another round of record profits in the third quarter, but beneath the headline figures there is growing concern in the industry over how much longer the boom will last.
Continental led off the third-quarter reports with what chairman Gordon Bethune claims is a "record financial performance". The airline kept net profits above $100 million, before an extraordinary provision of $128 million to cover the cost of replacement of Stage 2 aircraft were felt.
Bethune says that bookings also point towards a "very good" fourth quarter and is bullish for the outlook for further traffic growth. He expects 3-4% domestic growth over to the end of the century, with "more than that internationally".
With operating profit margins now above the targeted 10% mark, Continental plans to take advantage of the growth, but Bethune believes that the airline will not be over-exposed if the market turns down. "If the economics don't work out, we can cap our growth and give aircraft back to the lessors," he says.
AMR, parent corporation of American Airlines, also saw profits leap by more than $50 million in the September quarter, reaching $282 million. American chairman Bob Crandall warns, however, that the double-digit rise in fuel costs and the re-imposition of the federal ticket tax are due to bite in the fourth quarter.
Northwest Airlines, which showed a steady 10% improvement in net profits to reach $254 million, also warns of the risk of rising costs.
Source: Flight International