Air Transport World

High season.

Most U.S. Majors performed well in the traditionally strong summer quarter

Let the downturn come. U.S. airlines are ready, having completed a highly satisfactory third quarter ended Sept. 30, 1998. Several Majors reported record earnings and with fuel prices continuing to fall, the industry was largely able to offset generally rising labor expenses.

The pilot strike at Northwest Airlines and the absence of large non-operating gains at UAL Corp. and US Airways Group that were present in the year-ago period were largely responsible for a 27.6% decline in third-quarter profits for the U.S. Major passenger airlines (see tables). Net income for the 10 carriers totaled $1.4 billion for the three months to Sept. 30, compared with income of $1.9 billion in the 1997 period. If results for Northwest for both years are excluded, however, net earnings largely were unchanged from last year.

Combined revenues rose 1.3%, again, largely owing to the problems at Northwest. Excluding Northwest from both years' totals reveals a 5.9% overall rise in revenues. Industry operating expenses, meanwhile, rose 2.7% and operating profit fell 9% to $2.5 billion. If NWA results are excluded from both periods, operating profits for the remaining nine rose 24%.

At the unit level, average yield declined 1.1% to 12.39[cent] per RPM, with five of 10 airlines showing yield improvements. Unit revenue rose 0.7% to 9.79[cent], with seven of 10 showing improvement in RASM. Average cost per ASM, however, climbed 2.4%, with just four airlines able to reduce unit costs year-over-year.

A "very disappointing quarter" is how Northwest Airlines CEO John Dasburg described the carrier's performance during the strike-shortened period. …

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