Air Transport World

Double-digit traffic growth.(special section: 1994 World Airline Report)(Industry Overview)

The world's airlines enjoyed good traffic growth in 1994, as well as an improved financial performance. All in all, they turned in their best year of the "Nervous '90s," producing buoyant forecasts from securities analysts about the rest of the decade.

In one of the most significant breakthroughs, the U.S. industry, particularly the segment occupied by the major carriers, continued its climb out of the financial morass. No longer are these airlines the loss leaders of the world, as they were through the early years of the decade.

For the first time in the 1990s, five U.S. majors ranked among the Top 10 among world's airlines in operating profits. Three made the Top 10 in net results. In the past five years, such honors for U.S. airlines have been limited to Federal Express and Southwest Airlines, or to carriers from other parts of the world, especially those that reside in the Asia/Pacific region.

The airline that reported the biggest 1994 operating profit was not Singapore Airlines. Nor was it British Airways. Rather, it was Northwest Airlines, which also held onto enough of it to produce the fourth-highest net profit in the industry.

The U.S. majors' performance as a whole during the year has securities analysts impressed somewhat, and actually enthused about the progress these airlines have made toward preparing themselves for the future. Analysts especially are impressed with cost reduction, including the clamps recently placed on travel-agent commissions (ATW, 4/95). They also are enthused about the U.S. carriers' new-found ability to keep capacity growth below traffic growth, a trend that has accountants jumping for joy but is not making things particularly pleasant in Seattle, Long Beach or Toulouse.

While the U.S. industry was enjoying a good year, carriers throughout the rest of the world were reporting mixed results, but largely continuing their growth patterns. British Airways continued to lead Europe in financial results. And BA was second among all airlines in both operating and net profits through March 31, 1994. The U.K. carrier was joined in the Top 10 net profit makers by Lufthansa, ATW's '94 Airline of the Year, which gained nearly $200 million. BA's fiscal 1995 figures were not available at this writing.

In the Pacific region, Singapore Airlines continued its traditional strong showing, as did Cathay Pacific. They were joined by Korean Air and China Airlines in Top 10 operating profits. …

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