Air Transport World

King of the South. (Atlantic Southeast Airlines Inc.)(Company Profile)

Smart management and quiet determination keep Delta Connection Atlantic Southeast at the top of the heap

The mark of a good airline is one that survives during bad times. A great airline is one that thrives during those periods. Atlantic Southeast Airlines is one of the latter.

Case in point: 1994 was a trying year for U.S. regional airlines. Two highly publicized accidents had eroded the public's confidence in this mode of travel. Plus a severe winter and the threat of widespread, low-cost jet travel on the U.S. East Coast had affected regional airlines' profitability adversely. Yet, ASA's earnings rose 11% to a net of $52.6 million for the year. This was accomplished despite traffic losses due to flight cancellations and adverse publicity in the wake of the grounding of the ATR fleet following the Oct. 31 crash of an American Eagle ATR 72 in Indiana.

ASA has been one of the most profitable airlines, not just regionals, with a compounded annual growth rate of around 15% over the past five years. it also has had a pretax profit margin that has ranged between 22% and 27% since 1989, according to Robinson-Humphrey, an Atlanta-based investment firm.

That level of success is continuing. For the first six months of 1995, ASA posted a net profit of $24.5 million. For the second quarter, net was $15 million, $1 million less than the year-earlier period, because of an after-tax accrual of $2.6 million associated with the company's Stock Appreciation Rights Plan. The unusual size of the expense accrual resulted from a 63% increase in the company's stock price during the quarter.

For September, the airline flew 68.3 million RPMs, an 8% drop from the year-earlier period. its load factor dipped 8% to 45.3% compared with 48.1% during September, 1994. While ASA reported fewer passengers, yields improved, in part because of higher East Coast fares and the disappearance of Continental Lite, which eased short-haul competitive pressures.

ASA's string of profitable quarters is expected to continue. Robinson-Humphrey predicts a pretax profit of 27% this year. …

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