Air Transport World

Pray for a soft landing; the airline industry awaits a recovery but aircraft deliveries wait for no one. (Industry Overview)

Did you hear the one about the fellow who fen off the roof of the Em ire State Building? As he passed the 20th floor another fellow stuck his head out the window and asked him how he was doing. O.K., so far," was the reply.

The airline industry has a lot in common with that hapless fellow. It has been in a free fall for the past 18 months and will not know how bad things are until it hits bottom. The recent bankruptcies of Air Holland and Trans European Airways, the continuing problems at USAir and the retrenchment at American Airlines and SAS confirm the belief that recovery is not "just around the corner," as had been optimistically supposed at the beginning of last summer.

Instead, the industry is bracing for another cruel winter. In terms of financial performance, analysts expect that at best 1991 will turn out to be the second-worst year in history, surpassed only by 1990. No one is placing any bets on 1992 yet.

Through last August, total U.S. traffic was down 3.6% compared with the year-ago period, according to the ATA. The Association of European Airline said its members' intemational traffic was off 9.3% through the same period.

Not one to buck a trend, IATA reported that its members' intemational traffic was off 8% over the first eight months of the year. Orient Airlines Association member airlines' traffic fell 14% in july and was down 12% for August.

For the industry as a whole, traffic growth should turn positive for the fourth quarter but probably at the expense of yield and analysts do not expect it to offset nine months of declining traffic.

Morten Beyer, chairman of Avmark, Inc., the Arlington, Va. based consulting firm, says the industry "is still falling.... I see very little that is optimistic or encouraging."

Steven Udvar-Hazy, president of international Lease Finance Corp., tells ATW. "Our judgement is that between now and the end of the second quarter of 1992 will be a pretty rough period, one of the worst the industry has ever had."

Michael Post, a vice president with Lazard Freres & Co., says: "I tend to be fairly realistic. I don't think we've touched bottom yet, although we are not far off."

Even a surprisingly strong third-quarter performance by American Airlines could not cheer up AMR Corp. …

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