Alaska Airlines benefited from strong domestic traffic, lower fuel prices and higher unit revenues to post a record net profit of $38.9 million for the second quarter, nearly double the year-earlier $20.8 million. The company, with its mostly domestic route network, reported an 11.5% gain in revenue to $485 million. Expenses increased 7.2% to $422 million. The quarter was the sixth in which the company reported improved year-over-year profits.
Sen. Mike DeWine (R-Ohio), chairman of the Senate Judiciary antitrust panel, is evaluating foreign ownership laws, according to a speech given for him last week by staff Chief Counsel Louis Dupart. DeWine said he could support raising the ownership limit to 49% and lifting the ban on foreign control of U.S. carriers, provided other countries reciprocate. The changes could lessen the importance of international alliances and inject competition into the U.S. market, he said.
Aer Lingus posted a $65.5 million pre-tax profit for the 12 months ending Dec. 31, 1997, up 10% from the $59.4 million in 1996. The carrier had sales of $1.14 billion, up 15%. The net results would have been more favorable if discounting one-time items. Chief among the exceptional items were the losses incurred from the company's exit from the aircraft maintenance business, which lowered profits by $126.7 million. After writing down $42.6 million in assets and $78.1 million in maintenance employee exit packages, Aer Lingus posted a net loss of $65.2 million.
Major carriers opposing DOT's competition policy advanced similar arguments, backed by studies they say show the department is misconstruing competitive behavior as predation. Several also maintain that the department is exceeding its authority, a position disputed by some, including Southwest. That carrier is neutral on the value of the specific rules proposed but favors more federal action to protect competition.
Boeing yesterday reported higher sales but lower earnings for the second quarter and first half. Net earnings for the second quarter slid to $258 million on sales of $13.4 billion from net earnings of $476 million on sales of $12.3 billion during the same period last year. For the first half, net earnings were $308 million on revenues of $26.3 billion, compared with net earnings of $1.02 billion on sales of $22.7 billion.
Berkshire Hathaway said yesterday it has reached an agreement to acquire Executive Jet, a provider of fractional ownership of aircraft through its NetJets program in the U.S. and Europe.
FAA yesterday proposed measures that Tom McSweeny, director of aircraft certification, said will "reduce potential ignition sources" in 747 center wing tanks. The proposed airworthiness directive, which follows studies by the National Transportation Safety Board of potential failures that could produce ignition sources in the tanks, essentially will make mandatory what the industry already is accomplishing voluntarily under three Boeing service bulletins. Airlines already have started modifying the center fuel tanks on about 250 aircraft, Boeing said.
Southwest filled more airplanes and flew them longer distances - with cheaper fuel - on its way to the best quarterly profit in its history. Its second quarter net profit surged 42.2% to $133.4 million due to rising passenger yields, load factors and demand, the airline reported yesterday. Operating profit grew 33.3% to $208.5 million. "Clearly, it was a very, very strong quarter for us," said Chief Financial Officer Gary Kelly.
Raytheon Co.'s Raytheon Aircraft Division posted record second quarter sales of $639.0 million, compared with $620.4 million one year ago, and record operating income of $73.4 mil-lion, up 22% compared with the prior year. (See related story above.)
The National Mediation Board will conduct an investigation into The Aircraft Mechanics Fraternal Association (AMFA) petition to represent mechanics at Northwest Airlines, an NMB spokesman said yesterday (DAILY, July 23). The investigation is routine in such cases. NMB will verify that employees who signed petition cards on behalf of AMFA are Northwest mechanics.
Second-quarter results for the five publicly held U.S. regionals reporting to date have been stellar. Net income for Atlantic Coast, Atlantic Southeast, CCAIR, Comair and Mesaba was up 54.5%, 32.3%, 11,391.7%, 76.7% and 71.9%, respectively, while operating margins increased by 4.2%, 5.8%, 12.2%, 9.4% and 1.6%, respectively, over the June quarter a year ago. Traffic results also were outstanding. Revenue passenger miles increased 93% for ACA, 12.6% for ASA, 2.2% for CCAIR, 37.5% for Comair and 83.4% for Mesaba for an average jump of 45.7%.
Mesa Airlines and America West have entered a new six-year code-share agreement for Mesa to provide regional airline service as America West Express. The new agreement supplements existing arrangements between the two carriers enabling Mesa to provide a more convenient schedule for America West connections. It also provides significant opportunities for growth at both airlines, the carriers said.
Citing a list of what it considers predatory practices by major carriers, in particular United, Frontier filed yesterday in support of DOT's competition policy. It accuses major carriers of capacity dumping and below-cost pricing to run small carriers out of certain markets. United began a surreptitious campaign to destroy Frontier by dumping capacity and frequencies - up to 8,600 seats per week in the Denver-Los Angeles market - refusing competitors equal access to its network, and bribing travel agents with commission overrides, Frontier said.
Pilots for Norwegian regional Wideroe ended an eight-day strike Tuesday, returning the carrier's fleet of 25 de Havilland Dash 8s to the air. The 258 pilots had demanded a 15.6% wage hike but settled with the company for annual raises of 3.5% over the five years of the new pact. "The strike is over; we have agreed to a five-year pay deal. Now we are doing our best to get planes back in the air," a company spokesman said. SAS in June received regulatory approval to acquire up to 63.2% of Wideroe through mid-2003.
St. George, Utah-based SkyWest's unit costs during the June quarter rose 12.3% - or nearly two cents per available seat mile - to 17.3 cents per ASM while its yield per revenue passenger mile rose 14.8% to 37.3 cents, helping to make possible its record net income of $9.7 million (DAILY, July 23).
Delta Connection Atlantic Southeast Airlines' Air Line Pilots Association unit Master Executive Council today will consider a tentative contract deal reached between the pilot negotiating committee and management late Wednesday evening. The pilots on March 12 voted by 93% to reject a tentative contract proposed by its ALPA unit leadership, but negotiating committee Chairwoman Lynn Jackson said the new deal is a "significant improvement" over the rejected tentative agreement.
DOT yesterday issued an order inviting answers to United's complaint against the European Commission and the governments of Germany, Denmark, Norway and Sweden requesting sanctions against the collective respondents to "redress actions" proposed by the EC against United's alliance with Lufthansa and SAS (DAILY, July 9). The conditions proposed by the EC, precluding the carriers - and other U.S.-European alliances - from exercising rights "guaranteed" under individually negotiated open-skies agreements, are "illegal and in violation of the...agreements," United said.
The European Commission proposed a new version of its 1994 decision authorizing a 20 billion French franc (US$3.4 billion) capital injection into Air France this week in Brussels. The essence of the initial authorization remains unchanged. "Coming to a different decision would be absurd," said Transport Commissioner Neil Kinnock.
Air Canada pilots yesterday voted by a 97% margin to give their union bargaining committee a mandate to strike over salary issues. Ninety-five percent of the carrier's more than 2,000 pilots, represented by the Air Canada Pilots Association, cast ballots.
Arinc will introduce the next-generation data link - VHF digital link (VDL) - in the U.S. next year, it said at a GlobalLink symposium this week in Baltimore. Jim Pierce, Arinc chairman, said VDL is a "critical enabling technology for the global, seamless implementation of CNS/ATM (communications, navigation, surveillance/air traffic management) in the future."
Raytheon yesterday reported that second quarter earnings rose 29% to a record $269.5 million on sales of $5.1 billion. The results compare with earnings of $209.5 million on sales of $3.3 billion in the same quarter last year. For the first six months, net income grew to $484.4 million from $392.9 million on sales of $9.7 billion, up from $6.2 billion.
Delta Connection affiliate Comair posted decreases or nominal increases - one-tenth of a cent or less per available seat mile - in all major unit cost categories except employee expenses in its first fiscal quarter ended June 30.
US Airways said it was "bewildered" by DOT Secretary Rodney Slater's decision to grant British Airways' application for London Gatwick-Denver service (DAILY, July 23). US Airways objected to the route, saying it had been unable to obtain commercially viable slots for Charlotte-Gatwick.
