Continental and Northwest Airlines remained tight-lipped on their pending alliance talks as the two carriers led the US airline industry in a spectacular round of profit announcements destined to make 1997 the best year on record.
Neither of the two airline managements were prepared to answer direct questions on the alliance talks, which are back on after approval from the Northwest pilots union and could involve the airline purchasing a 14% stake in Continental.
Continental chairman Gordon Bethune, however, confirms previous comments that the airline is prepared to put itself into play as a merger partner. "If there are opportunities we will listen to and perhaps proceed with them if they make sense," he says.
The extent of Continental's turnaround was confirmed as the airline unveiled record net profits of $389 million for 1997, and handed out a hefty $105 million to employees in profit sharing.
Northwest turned in its fourth successive year of profit growth with the net result edging up to $583 million, although the company warns of softening in key Asian markets, including Japan. The airline also confirms that it will accelerate the repurchase of KLM's remaining 16.8% stake, finishing the deal by May rather than late 2000 as originally planned. KLM will receive $345 million in cash and another $435 billion in bonds for the shares.
Elsewhere, the recovery continued, with US Airways breaking the $1 billion profit barrier, although that came after taking a $467 million tax credit, left over from its years of heavy losses. The underlying net profit, also excluding the sale of its holding in the Apollo reservation system, came in at around $500 million, nearly doubling the previous year's performance. US Airways also confirmed the buy-back of 2.3 million shares which will go to its pilots this year, in return for their approval to set-up a new low-cost operation.
Delta and American Airlines parent AMR also came close to the $1 billion mark for the year, with others expected to follow.
With most of the results now in from the nine US major carriers, the total looks on course for a combined net profit of about $5 billion. In 1996, the underlying net profits, excluding major exceptional gains and losses, had come in at a new record of more than $3 billion.
Source: Flight International
