As well as the usual group of high earners, the list of profit makers includes many carriers which have turned round their operations successfully (see page 43). Inevitably, Singapore Airlines, British Airways, Cathay Pacific and Federal Express head the list of highest profit makers. But Northwest Airlines and KLM have improved their performance sufficiently to reach fifth and seventh respectively in the net profits ranking, and a further eight carriers among this year's top 20 profit makers - led by SAS - have turned around from losses in 1993.
This year's best overall turnaround was achieved by Sao Paulo-based Vasp. Expansion overseas and economic recovery at home enabled Vasp to more than double its revenue last year, and Vasp's net profit of $182.5 million gave it the highest net margin in the Airline Business 100 (not counting accounting gains). Yet the carrier lost $103 million in 1993.
Like Continental's and TWA's in 1993, Hawaiian Air's 1994 net profit arose from its emergence from Chapter 11 in September; it lost $26.8 million for the full year before extraordinary items.
Small remained beautiful. Of the airlines with the top 20 net margins, half are below the top 100 in revenue terms and only SIA, Aeroflot, Cathay Pacific and Air New Zealand are top 50 carriers. Atlantic Southeast AL underlined the inherent strength of the regional airline industry by achieving a net margin of 16.9 per cent. St Petersburg- based Aviation Enterprise Pulkovo turned in an exemplary profits performance, but it may not follow western accounting practices. In its first full year of operations, ValuJet achieved an astonishing $20 million net profit.
This year's list of heavily money-losing airlines contains the inevitable names of the financially troubled. Most continue to restructure, booking significant one-off charges, and a few suffer from disasters in the general economy. Thirteen airlines each lost over $100 million, and between them they lost $4.7 billion - more than enough to wipe out the profits of the top 20 earners. In this group are four US carriers - USAir, Contin-ental, TWA and Delta; the Latin American sufferers Aeromexico, Mexicana, Varig and Aerolineas Argentinas; and Europeans Air France, Iberia, Aer Lingus, TAP and Alitalia.
In terms of operating performance, the airline industry had its best year ever in 1994, as the 100 largest carriers recorded a collective operating profit of $10.9 billion. Most of this was earned by 20 carriers. AMR Corp's $1 billion operating profit places it in the lead here, although British Airways is a close second and Northwest is not far behind. Alitalia's seventh position, with an operating profit of $528 million, indicates that it may be making more progress than it has been credited with. Aeromexico's strong operating performance also contradicts its position as the second highest money-loser at the net level. But the net result has been heavily influenced by the devaluation of the peso.
Source: Airline Business
