Air Transport World

U.S. majors. (World Airline Report 1989)

American: The largest U.S. carrier continued racing down the growth track in 1989, slowed only by its inability to acquire airplanes rapidly enough to take advantage of all the opportunities that it sees waiting to be grabbed.

Although sharply higher fuel costs in the fourth quarter cut parent AMR Corp's net profits for the year to what Chairman/President Robert L. Crandall termed a "disappointing" $454.8 million from $476.8 million in 1988, the company still achieved what he referred to as "a very successful year in several ways." He cited a 13.5% increase in RPKs, establishment of a seventh major hub at Miami, continued strengthening of American's position in Europe and the Caribbean, and a "dramatic" increase in cargo revenues as among the year's accomplishments.

The year also brought an unsolicited buyout proposal from New York real-estate magnate Donald Trump that was withdrawn 11 days later, ground breaking for a 750,000-sq.-ft. expansion of the company's headquarters complex and for a second major maintenance base at Ft. Worth-Alliance Airport, placement into service of American's first 757 and initial testing of a fully automated bar-coded tracking system for cargo, among other events.

International growth heads this year's agenda. American began service to Sydney and Auckland in February and currently is awaiting DOT approval of its proposed purchase of TWA's Chicago-London route and of Eastern Airlines' Latin American route network and Miami-Madrid rights, along with Continental's Miami-London authority. It also is seeking several Pacific routes in the 1990 U.S.-Japan Gateways Proceeding to complement its present DFW-Tokyo route.

AMR's revenues surged 18.8% in 1989 to a record $10.48 billion but a 21.4% rise to $9.74 billion in expenses reduced the company's operating income ti $744 million from $806.5 million in 1988.

On the traffic front, passenger boardings rose 12.5% to 72,074,159, RPKs jumped 13.5% to 118.2 billion, FTKs soared 29.9% to 928.9 million and mail carriage skyrocketed 38.8% to 365 million ton-km. Capacity grew at a lesser 12.9% rate than traffic, boosting load factor 0.3 points to 63.8%.

America West: Elevation by DOT to major airline status, record traffic and profits, inauguration of service to Honolulu and nine other new destinations, opening of a new res center in Baltimore, and receipt of ATW's Labor/Management Award were among the many highlights for the Phoenix-based postderegulation carrier in 1989 (ATW, 12/89).

DOT reclassified America West as a major even though, unlike fellow new major Southwest, it failed to top the $1 billion benchmark that divides nationals and majors. DOT noted that because the new classifications actually are effective for 1990 publications and there is little question America West's revenues will easily exceed $1 billion this year, placing the carrier in the majors "will more accurately reflect [its] level of activity." America West Chairman/CEO Edward R. Beauvais called the DOT action "a memorable moment."

Last year ended with revenues of $993.4 million, up 28.1% from 1988. Operating expense rose only 24.8% to $945.3 million, resulting in an operating profit of $48.1 million compared with $18.1 million the previous year. Net income reached a record $20 million, more than double 1988's $9. …

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