Major US airlines are expected to earn record profits this year and surpass them in 1999, predicts David Swierenga, chief economist for the US Air Transport Association (ATA).
He says ATA's member airlines will post $5.4 billion in net profits in 1998 and record as much as $6.5 billion next year. The US air carriers collectively earned profits of $5.2 billion in 1997.
Swierenga says ATA's membership will end 1998 with an average load factor of 70.9%, marginally up from 70.5% last year. A decade ago, the average load factor was only 63%. He says traffic will slump when the economy does, but the ATA view is that US airlines will not suffer a recession in 1999.
The forecast of rising profits for the major US carriers comes against a background of a continuing fall in air travel between Asia and the USA. The association expects to record a 10% decline this year compared with the 1997 traffic to the region. The sharp drop will be offset by a projected 13.2% increase in traffic on transatlantic and Latin American routes.
The optimistic appraisal by the ATA runs counter to predictions of an airline downturn next year from several US carriers. United Airlines executives say they are preparing for the next recession. American Airlines, citing predictions of a weakening international economy, is cutting its growth plan for 1999.
Source: Flight International