Air Transport World

U.S. majors. (1991 World Airlines Report)

Editor's note: The traffic and financial information in the following airline summaries, unless otherwise noted, is taken from annual reports and other material supplied by the carriers. Because of differences in reporting requirements, it may not agree with the DOT data contained in the tables on these pages.

American: "The best thing you can say about last year is that it's over," said AMR Corp. Chairman Robert Crandall as he announced a net loss of $239.9 million for 1991, up dramatically from a loss of $39.6 million in 1990.

AMR Corp. revenues grew 10% to $12.9 billion, well ahead of UAL Corp.'s $11.66 billion but operating income dropped to a bare $5 million from $124 million in 1990, as expenses jumped 11.1%.

According to DOT filings, American Airlines accounted for $12.1 billion of AMR's revenues and had an operating profit of $17.5 million and a net loss of $165.4 million.

Crandall laid the blame for the poor results on a combination of "the dismal economic environment," the Gulf War, rapidly rising costs and "the shortsighted and irrational pricing practices of some of our competitors."

In an effort to counter the latter factor, American implemented a major overhaul and simplification of its domestic fare structure this spring, that eliminated more than 85% of the 500,000 separate fares it offered but that could have an adverse impact of $100 million on second-quarter revenues. Most other carriers quickly matched the 4-tier structure, which includes dramatic reductions in first-class and full-coach tariffs, incorporates a $25 fee for almost any change in a passenger's booking and eliminates nonrefundable fares and all corporate and convention discounts. Crandall said American will save at least $25 million a year in fare-administration costs alone as a result of the changes.

Traffic, meanwhile, showed good gains last year. American recorded increases of 3.7% to 76 million in passenger boardings, 6.8% to 132.5 billion in RPKs and 10.1% to 1.23 billion in FTKs. Capacity was up 7.8%, sending load factor down 0.6 point to 62.3%. Interestingly, American's announced RPK figures placed it about 100 million ahead of United in that category to rank it No. 1. Lower totals in its DOT filings, however, placed it in the No. 2 position.

Last year was highlighted by the July introduction of service to London Heathrow Airport over routes purchased from TWA. American also bolstered its Pacific presence through addition of service to Tokyo from Seattle and San Jose, although it abandoned service to Australia. And its already-formidable Latin American presence was strengthened dramatically by Pan Am's demise.

Despite the growth, 1991 was the year in which American decided to cut its future capital spending by $8 billion by letting options lapse for 11 MD-11s, 12 767s, 33 757s and 37 Fokker 100s. It already had dropped options on 80 MD-80s early last year. Its capital cuts shortly were duplicated by United (see below).

This year is expected finally to see some ties between American and non-U.S. carriers. It already has announced "detailed discussions" of a possible "strategic alliance" with Canadian Airlines International and it also is rumored to be talking with European carriers.

America West: The Gulf War and the U.S. recession contributed to the addition of America West to the list of bankrupt U.S. carriers in 1991. …

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