Air Transport World

U.S. majors.(major airlines)(World Airline Traffic Statistics)

34.76% of world passengers

34.06% of world RPKs

23.59% of world FTKs

Alaska Airlines: Despite what Chairman John Kelly described as "the most intense competition in our company's history," from Southwest, Shuttle by United and other carriers, Alaska Airlines managed to chalk up improvements across the board in 1995, particularly in cost reduction (ATW, 5/96).

Although yield per RPM dipped to 11.59 cents from 12.20 cents, the carrier reduced its ASM cost to 7.71 cents from 8.27 cents. As a result, operating profit rose to $72.4 million from $62.9 million in 1994 and pretax income climbed to $43.9 million from $39.3 million. Revenues were up 7.5% for the year to $1.1 billion.

Net income at parent Alaska Air Group, however, was down to $17.3 million from $22.5 million, largely as a result of increased interest expense. Operating income was up to $75.9 million from $75 million while revenues climbed 7.7% to $1.4 billion.

On the traffic front, Alaska Airlines' passenger total rose 13.2% to 10,140,000 and RPKs advanced 13.1% to 13.8 billion. Capacity, was up 14.9%, reducing load factor one point to 61.8%.

American: Massive fourth-quarter write-offs of $533 million ($333 million after taxes) changed what would have been a very strong year for American into one that was significantly weaker than 1994. The write-offs, to cover employee early-retirement programs and aircraft retirements, caused earnings at AMR Corp. to fall 27% compared with 1994 to $167 million. The Mrline Group, including American and AMR Eagle, posted a 1995 pretax loss of $81 million compared with a $3 million loss in 1994.

Parent company revenues rose 5% to $16.9 billion but all of the write-offs occurred at the operating level and operating profit was up only' 1% to $1 billion. The Airline Group reported an 8% drop in operating income to $564 million. American Airlines recorded a 4% increase in revenues to $13.3 billion, American Eagle's revenues declined 2% to $775 million and American Cargo's revenues rose 2% to $677 million.

Perennial moneymaker Sabre Group produced pretax profits of $371 million, up from $321 million, and AMR's Management Services Group netted $68 million, up from $52 million. AMR Corp. is preparing to spin off the Sabre Group into a separate subsidiary and is expected to seek a listing for shares of the company's stock. AMR noted that the Sabre Group requires "a significant amount of investment spending" to remain competitive.

American has succeeded in reaching new agreements with the Transport Workers Union and Assn. of Professional Flight Attendants, which Chairman and CEO Robert Crandall said "should provide us with a solid base for continued progress in the years to come." But the airline has been frustrated in efforts to come to agreement with its pilots and expansion plans are on hold until this is accomplished. The Allied Pilots Assn. bargaining is in mediation.

Because it has decided to buy no new airplanes without a pilot contract, American has been redeploying its existing fleet to improve performance. Jet service was eliminated in 19 city-pairs in 1995 and the Nashville and Raleigh/Durham hubs were essentially closed. As sale of 12 MD-11s to Federal Express is completed, A300s now operating in Caribbean markets will be reconfigured for use on shorter transatlantic routes and will be replaced by 727s that American had planned to retire this year but now will retain. …

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